We are looking to invest in Indian startups addressing global markets, says Pankaj Mitra, Head, Cisco Investments
Before joining Cisco, Pankaj Mitra was a principal at the innovation fund of Infosys. Armed with a bachelor’s in Electrical Engineering from IIT Kharagpur and an MBA from the University of California, he also led products at VMWare and engagement strategy at Deloitte.
Later, he joined as the Director and India Head at Cisco Business Development in 2018.
At the recently concluded Cisco India Summit in Kochi, YourStory caught up with Pankaj, who shared his insights on trends, emerging markets, and Cisco’s role in the prospectives.
When asked about Cisco being a co-investor in many startups and funds for the last 20 years, he said the company is a strategy placeholder in the deals, where it brings in the go-to-market strategy and visibility to startups.
He also said that Cisco aims to help its India business, and is also looking to invest in Indian startups that are addressing global markets.
Edited excerpts of the interview:
YourStory: Apart from investing, what are your other key areas of focus?
Pankaj Mitra: We do investments, mergers, acquisitions, and joint ventures (partnerships) that facilitate spurring and inorganic growth for Cisco. When I say inorganic, it means the focus is not within the four walls of Cisco, but outside. Our objective is to help our India business, and also to invest in Indian startups that are addressing global markets.
We recognise that a lot of innovation is happening outside of Cisco. The point is to enable Cisco to see around the corners and what is coming next to the market. It is difficult to do that from an outsider’s perspective. Through this, we go to lengths to see how companies are addressing the market, creating new segments within it, and creating new technologies to disrupt the existing markets.
The investment side of the house gathers a lot of insights, while the acquisitions are about identifying which companies are strategic to Cisco and whether it makes sense for them to be a part of Cisco’s network. If it is justified, we go ahead and acquire those companies.
YS: What are the investment wing’s actions that contribute to the core innovation strategy of Cisco?
PM: We have been investing and acquiring for the past 20 years. Cisco is one of the very few corporates where investment is a part of fundamental cores of innovation.
There are five pillars to Cisco’s innovation strategy - we build, buy (acquire), invest, partner, and co-develop. Buying and investing are the fundamental parts of it.
Our engineering team runs an accelerator called Cisco LaunchPad. It’s like a traditional accelerator but Cisco doesn't take any equity. We invest in rather early-stage startups - seed stage or even pre-seed stage. We offer technical mentorship, sales mentorship, and help them connect to customers. It’s our way of giving back to the ecosystem.
As for the Cisco Investment team, we add value to startups by exposing them to our channels. We have an excellent relationship with top VCs in India, who are specifically looking at enterprise tech and enterprise software. Consumer companies might not have a lot of relevance with us from an investment perspective, but definitely from a partnership perspective.
Even the acquisition depends on a lot of factors. If it's a small company, it's about the team and the technology, and if it’s a big startup, we look at the business they have built, and how diligently they built it.
YS: Why should startups approach Cisco for an investment?
PM: Cisco has a $50 billion go-to-market machine. Startups can benefit from the scale of the company, our customers, and our partners. We also have a very active portfolio development team whose only purpose is to connect the portfolio companies to the go-to-market machine.
YS: What are the parameters you look at before investing in a startup?
PM: There are three things we look at - core areas, adjacencies, and new markets.
In core areas, we primarily look at enterprise networking, collaboration, and security. We have been super active investors in this space and will continue to do the same in India.
As for adjacencies, we see if a market is interesting-looking-fit in terms of adjacency. Sometimes the focus may move from adjacencies to the core. We acquired security firm Duo for $2.3 billion, which made the security space core to Cisco. Because of our investment in this adjacency, we were able to track this transition.
And talking about new markets, AppDynamics was a new market for us. We've been looking for sectors that we haven't traditionally invested in. If there are massive emerging sectors in India, it would be good for Cisco to get visibility in these sectors. These insights would help Cisco's business grow.
What we really look for is the team and its culture. We look if these guys domain experts, and if they really understand what's going on in the market. We also don't invest in a company we don't think we can add value to.
YS: What are the major elements of the ecosystem that you are bullish about?
PM: We have been very bullish about the startup ecosystem in India. The three things I see are - talent from premier institutions like IITs, talent from corporates and MNCs, and successful employees from successful startups.
There is a lot of talent that's hungry for entrepreneurship, which is great for the country.
As for corporates and MNCs, the alumni from their R&D centres have now figured out how enterprises work and how markets work. These people are now coming back to startup. Successful employees from companies like Flipkart are now starting their own ventures.
There is talent, and they’re coming from enterprises. A lot of VC money is going into the B2B space these days. B2C obviously has the dominant share, but the B2B market has grown tremendously, by at least 30 percent, in terms of investments.
If you see, companies like Freshdesk and Zoho are also successful outside of India, which shows Indian startups are also able to figure out how to sell outside our market.
B2B and enterprise ecosystem is really taking off in India, and this is what we are bullish about.
YS: Tell us about your recent investments in India.
PM: We recently invested in Whatfix and two VC funds - Chiratae Ventures and Stellaris Venture Partners.
We looked at Whatfix because of their alignment with our core focus area, which is CX (customer experience). Cisco is a customer of Whatfix, which is essentially making applications easier to adopt. Cisco’s applications benefit from that and even our customers’ applications benefit from that. So, it makes sense for us. It’s a new market transition we want to get exposure in.
We liked Chiratae and Stellaris for the nature of the funds. Like us, they’re also very bullish on the B2B enterprise ecosystem.
YS: What do you think about collaboration vs competition in the Indian startup ecosystem?
PM: I think collaboration is the only way to go. The younger an ecosystem is, the more it is necessary to collaborate. It’s like the quote that says, rising tide lifts all boats. That is what we are doing with the launchpad. It is our way of keeping track and helping those startups in the early stages.
Even in our portfolio companies, we have founders talking to each other and collaborating with each other. The same is with Cisco as well. We gain more insights and resources out of the startups than startups get out of us, in terms of market understanding and innovation. Our idea is how to make this ecosystem grow to make it the next Israel or the next Valley.
PM: Logistics is a very India-specific problem. We see so many startups coming out in this space, even in B2B. It’s a $100 billion market in India that is unorganised and it is being organised by these startups, and they are all being tech-driven (eg. Blackbuck, Rivigo, etc.)
Logistics is growing really fast. You don't see a market doubling like that when it's worth over $100 billion. That’s one sector we are looking at to help it better innovate with our own resources.
YS: Google is a master of network effects. It operates in multiple products to cater across all industries. For a company as large as Cisco, to ace these network effects, how can investments play a part?
PM: Everybody wants to be a super app, and this is the reason we acquired AppDynamics. We were a networking company and we had to secure our network. And over time, we grew to be the largest cybersecurity vendors on the planet.
We have the network and IT infrastructure setup already. And we also have applications running on top of them. The key role of AppDynamics was to marry the information on the infrastructure level with the information we now have on the application level. Suddenly, we have now become a super app in some sense.
So, from a data centre or cloud environment perspective, we know exactly what the customers want, and what their bottlenecks are. If there's a larger scope for us to solve better problems for our customers, we make it possible through acquisitions.
YS: What is the larger vision for Cisco Investments?
PM: It is about looking at the world outside Cisco and how it can help grow Cisco. Meraki (San Francisco-based cloud and IT company) was a leading product line, which was also an acquisition. It added value to Cisco.
I now see Cisco to be a strategic investor of value, along with the VCs, to help startups reach a substantial scale, which would be difficult otherwise.
YS: What is the map ahead for the next five to 10 years? Would Cisco continue to be a strategic investor or is it looking to lead the rounds?
The cheque sizes can go to tens of millions of dollars if it’s a super strategic investment. If the deal has a scope to contribute to a large chunk of Cisco’s growth, we will lead that round ourselves.
It all depends on how holistic the growth can be for Cisco, its customers, and startups. If all the boxes are ticked, we don't mind investing even in Series C or D rounds.
In a country like India, the pace of innovation is on the rise. Due to the abundance of talent, maturity in the VC ecosystem, and past successes, people are gaining experience and confidence like I said, which is a very good thing for the country.
(Edited by Megha Reddy)