Why this family businessman created a venture fund for internet startups
Promoter-shareholder of Patni Group, Amit Patni comes from a lineage that has seen different stages of digital ecosystem. "My father and his brothers had started Patni computers in the 1970s. We were one of the pioneers in the information technology space across the board," he says.
Over the decades the company grew to close to USD 1.5 billion. In 2002, General Atlantic Partners invested in Patni Computers. They went in for an IPO in 2004 and in 2011 iGate bought Patni Computers for USD 1.5 billion.
After this, Amit went ahead to establish the family-run Ray Global Investments. "It was then I had decided to reallocate the corpus into different asset classes and look into building an asset management and financial services organisation," he says. With this idea, Amit, along with his brother, decided to establish Nirvana Ventures. It was established as a fund for internet startups.
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Establishing a fund for internet startups
During the years 2011 to 2013, there were several private equity funds but Amit says nobody was looking particularly at the startup ecosystem. "They were sector agnostic and were looking at growth capital," he adds.
However, with Nirvana Ventures, Amit wanted to work closely with entrepreneurs in operating businesses. Hailing from a technology background, it was natural for him to do so, especiallay since he saw a growing trend in the internet. Thus, deciding to take a plunge, Nirvana got Rajan Mehra as the Operating Partner. He has run eBay in India and has also run several internet companies.
The fund was established and the family anchored it by committing USD 15 million. They raised money making it a USD 40-million fund. Nirvana soon began investing in internet startups and consumer internet companies. Its portfolio of companies includes KartRocket, Zopper, Housing, Transerv, UrbanPro, Remedinet, Jombay and Games2win.
While the typical investments by Nirvana Ventures are for the seed rounds, the team ensures it follows up with subsequent rounds as well. It ensures it maintains a stake of 20 to 25 per cent in the invested organisations.
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Learnings from the entrepreneurial journey
Entrepreneurship, Amit says, has taught him how to identify truly passionate entrepreneurs. It has also taught him to understand if an idea is truly disruptive, assess the execution ability of the team and also helped in setting up systems in an organisation. "We understand from the company when the right time is to hit different markets and even raise their next rounds of funding," he says adding that Nirvana likes to work with a few companies that have a strong value add.
Having operated businesses helped Amit’s company know what the pitfalls were and when to take the right call on expansions, numbers and metrics. "Typically, entrepreneurs are into product building and it takes time for them to realise the business angles," he adds.
Close to a decade back, when entrepreneurs were mostly running family businesses, there wasn't much of a culture of raising money. "One would not like to entertain ventures or money from outside. Today, entrepreneurs are self made and are more open to learning," Amit explains.
The current startup ecosystem
The startups in India are maturing, but according to Amit they are still lagging behind Silicon Valley by a good 10 years. He saw the ecosystem shift from 2007 to 2011, when they first launched Nirvana. There are now several entrepreneurs who come in from Europe and US and there are many incubators in India.
Also, there is lot of talent from the top colleges in the country. Additionally, there is an increasing interest from international funding for the Indian ecosystem. This, Amit says, is a boost to the Indian ecosystem as it also helps with the exit strategies for angel and seed round investors.
"The entrepreneurs today are hard working and they value the money coming into the system. The ecosystem is just going to get more vibrant," adds Amit.
Mr. Amit Patni is attending Startup India Rocks 2015 – Goa on the 7th and 8th of October 2015. For more information about the event, please look up www.startupindia.rocks or contact Mr. Mandar Gadkari at [email protected] and +91-9833632041