Silicon Valley VCs eye non-IT startups

BANGALORE: It’s good news for Indian companies, especially, start-ups in non-IT sectors like speciality retail, financial services, media & entertainment and healthcare services. Moving away from their traditional haunts of IT and internet-related areas for investing in the US and other countries, some Silicon Valley tech-focused venture capital firms (VCs) are now looking at non-IT emerging sectors to invest in India.

Canaan India executive director Alok Mittal said, “VCs are adjusting themselves to invest in India. Firms which are more technology & consumer internet led or focused on mid to late-stage investments in the US and Europe, are eyeing either growth-stage or late-stage tech firms or different sectors in the country.”

Among the funds which are trying new vistas here are Bessemer, Mayfield, Matrix Partners and, to some extent, Sequioa Capital India. Bessemer Venture Partners has invested in companies like stock broking firm Motilal Oswal Financial Services and Shriram EPC, a specialized engineering & construction services company. While Matrix Partners India recently has said that it would begin to focus on growth-stage companies in consumer-related but not internet companies, a departure from its usual early-stage tech focused strategy on US.

According to Navin Chaddha, Managing Director of Mayfield Fund, “we believe India’s competitive edge extends beyond IT services and ITES into areas such as precision and value add manufacuring, lifescience services and KPO. There is tremendous opportunities in non-IT sectors for creation of companies which will buy IT for operational efficiency.

Hence we are looking at growing areas which involve consumer spending and infrastructure spending.” Mayfield has in the last year invested in optical networking equipment vendor Tejas Networks and Seedfund. It is looking to invest in speciality retail, financial services, media & entertainment, healthcare services, consumer internet services and consumer goods. Infrastructure is another big area the firm is looking at, which it does not invest in its home country

. “There is $450 billion spend being planned in India over the next 5 years in this sector. We are looking at areas such as infrastucture ancillaries in power and energy equipment, manufacturing, logsitics, supply chain management and specialised construction services,” added Mr Chaddha.
Mr Mittal said, funds are also putting in place teams with different skillsets because of the shift in focus.

Stating that India’s growth is all-sector currently, Ashish Gupta, Managing Partner, Helion Ventures said, “the job of an investor is to get returns and it is not easy for either Silicon Valley funds or funds based in India to ignore other growing sectors. The landscape in India is different from countries like US and Europe since there is so much of greenfield opportunity.”