Mumbai Angels to be guardians for small business

MUMBAI: For a country that has private equity capital coming out of its ears, ‘garage’ entrepreneurs haven’t seen too much of it coming their way. Most of the $3 billion inflows into the country this year (and last year) have been deployed in large-sized and medium-sized deals. Today, investing in early stage companies, typically those that have less than Rs 5 crore revenues, is considered a mug’s game.

“That’s not quite true. We believe there is a huge opportunity in early stage investing in India,” says partner in BlueRun Partners Sujit Banerjee, with just a touch of defiance. He will need more than that if BlueRun has to make a match of it in the early stage investments in India.

BlueRun has the pedigree. It was spun out of Nokia Venture Partners, which is Nokia’s venture capital arm. It now has some Indian ‘ear-to-the-ground’ intelligence as well. It now has Sasha Mirchandani to help them execute the plan they have. Sasha is the son of Onida’s founder and CEO Gulu Mirchandani and also a member of Mumbai Angels, a bunch of people who invest in fledgling companies. BlueRun has been around in India and does have a few interesting investments like Nevis, which does security software, Deeya, which is developing a type of battery or Ugenie, that makes online shopping engines that do price comparisons but all these are Indo-US corridor plays.

Countless funds like BlueRun ventures have come and done that without significantly altering the commercial side of innovation in India. “What we are looking at now is a different model for India. We want to look at cost-effective innovation that can serve markets such as India,” says Sasha Mirchandani.

This is essentially a new spin on a old theme ‘import substitution’. BlueRun contends that markets in India such as telecom or financial services, that are exploding in size, do not have high enough revenues (in dollar terms) to support the high cost equipment or software developed in the West. “

So we want to fund equipment companies that can deliver performance but are not as expensive as those of MNC brands. Before anyone thinks this will be cheap technology, Sujit clarifies that what BlueRun will back is innovation that lowers the cost. For example, Deeya Technologies has a battery technology that can actually bring down the power bill of telecom equipments.

“This ends up lowering the cost and boosts margins for the operator,” he says. The big challenge will be having served the Indian market whether they manage to operate in global markets. “We believe that we can give out inputs and help them make that transition after they have captured the markets here,” says Banerjee. This approach is in contrast to a few years ago when VCs refused to bankroll local market ideas by saying, “I want to see global ideas.”

“I can see some merit in that because you have to be close to the market. But India is a big market now. And besides many of the VCs who said that they were actually investment bankers rather than people with any experience of building companies,” says Sasha Mirchandani.