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There is a reason why startups playing with cutting-edge technology are called disruptors. They demolish the old world order, disrupt the status quo, and usher in change. In fact, the larger, more established companies find it hard to innovate as nimbly and quickly as the upstarts.
In India, the traditional tech companies are staring at an existential crisis. Riding on the back of a large pool of talented engineers, companies like Infosys, TCS, and Wipro established the country as the outsourcing capital of the world in the 1990s. But advantages eroded over time. At the same time as other low-cost tech hubs emerged in China, Vietnam, and the Philippines, a wave of new and flexible startups focused on disruptive technologies stole the thunder.
See: Why India must fix its obsession with software services and pivot to products
Even if the tech giants haven’t innovated or evolved as much as they would have liked, what they do have is loads of cash. So they’re doing the next best thing – investing in innovators outside the company – that is, startups. Global tech companies like Google, Intel, and Qualcomm have had venture capital arms for some time now, and they have been actively backing young companies across the globe. Now, Indian companies too are getting into the corporate venture capital game. Even local startups that started up a few years ago and grew rapidly are setting up VC funds. After all, who better than them to see the value in startups?
Here are five such funds for startups set up by the larger Indian tech companies:
1. US$15 million MakeMyTrip travel innovation fund
Online travel company MakeMyTrip (NASDAQ:MMYT) just set up a US$15 million innovation fund to support early-stage startups. According to its official statement, the fund will be deployed to back startups in travel technology, with a special focus on mobile and IP-based companies.
MakeMyTrip, one of India’s big startup success stories, was founded by Deep Kalra, Rajesh Magow, and Keyur Joshi in 2000, when the internet wave and private equity funding first swept through India. The company listed in the US in 2010, and according to its co-founder and CEO-India Rajesh Magow, the new fund of US$15 million is now 10 percent of its cash position. The company has been actively pursuing merger and acquisition opportunities in the travel technology space as well.
2. US$25 million InMobi fund for game developers
A month ago, India-based mobile advertising network InMobi set up a US$25 million fund to engage with game developers. Apart from funding, InMobi will offer advisory services to game developers on aspects like global scaling, monetization, and ad experience creation.
The Bangalore-based startup has come a long way since it was founded in 2007. Now it competes against Google and other internet giants in the mobile advertising segment.
3. US$100 million Wipro fund for startups
Wipro, India’s third largest IT services company, recently set up a venture capital fund that will invest in early-to-middle stage technology startups globally.
Earlier too, Wipro has made investments in startups. Last year, it invested US$5 million in US-based Axeda Corporation, an ‘internet of things’ startup that securely connects machines and sensors to the cloud. Axeda was acquired by PTC (NASDAQ
TC) for around US$170 million a few weeks ago.Wipro’s new corporate venture arm is headed by Rishad Premji, son of company chairman Azim Premji.
4. US$100 million Infosys innovation fund
Last year, Infosys made news when it earmarked US$100 million to focus on new ideas, products, and platforms. The objective was to provide a much-needed fillip to its products, solutions and platform businesses that contribute less than six percent to Infosys’ overall revenue. Last month, the new Infosys CEO Vishal Sikka announced that he is in on the lookout to put the fund to use.
In the coming weeks, the company intends to work with venture capitalists, incubators, and accelerators to spot interesting startups to back.
5. Persistent Venture Fund
Pune-based software services firm Persistent Systems announced an early-stage investment fund last December. The fund plans to infuse up to US$250,000 in startups focusing on innovation in social, mobile, analytics and cloud (SMAC). It has invested in three US companies so far: free video-call app Ustyme, life sciences startup DxNow, and wearable tech startup Hyginex.
BSE-listed Persistent was founded in 1990 by IIT Kharagpur alumnus Anand Deshpande to develop software solutions in different verticals like analytics, big data, life sciences, and so on.
This is not all; there are other older funds. For instance, One97 Mobility Fund set up a few years ago. This US$100 million fund from India’s leading mobile internet company One97 Communications in collaboration with SAIF Partners was set up to support entrepreneurs in the mobile technology space. India’s leading mobile internet company One97 Communications in collaboration with SAIF Partners set up the fund. The idea is to support entrepreneurs in the mobile technology space. Besides venture capital, OMF shares operating experience, mentorship, and resources with the startups it picks.
One of its portfolio companies The MobileGamer was sold to Singtel Idea Factory and Softbank two years ago. It just participated in the seed funding round of TargetingMantra, an Indian startup that arms ecommerce companies with Amazon-like personalization tools to lure, coax, and help consumers loosen their purse strings online. The One97 Mobility Fund portfolio includes Indian mobile commerce leader Paytm, artificial intelligence startup Dexetra, and customer insight provider Ciqual.
Even software industry associations, which were earlier focused totally on the needs of tech majors, are now out to support entrepreneurs. For example, the National Association of Software and Services Companies (NASSCOM) kickstarted an initiative called 10,000 Startups, and even set up a co-working space called Startup Warehouse in Bangalore. As part of the initiative, NASSCOM provides early stage support for startups through incubation programs. Its plan is to incubate, support, and help fund 10,000 technology startups in the next 10 years across India.
See: Scale up your mind: What is venture capital funding and how does it work?
(Top image: 401K)
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