September 06, 2012 at 13:01 PM EDT
Nexus Raises A Third Fund Of $270M To Find The Next Killer App, In India
In the rush to find the next great tech company, VCs eschewing the crowded scene in Silicon Valley are looking further afield for their gems. For some that means other cities in the U.S. and going to Europe and South America; and for Nexus Venture Partners , the answer is India, where it has focused its investment efforts since 2006, and will continue to do so, with the closure of a new $270-million fund, its third to date (the previous two were for $100 million and $220 million). Backers of the fund, according to Naren Gupta, co-founder of Nexus, come primarily from endowments, foundations and financial institutions in North America and Europe, with only a smattering from Asia itself. "They see the Indian market as the market of the future," he explains, with backers including organizations that have "done quite well in China lately and see India as 10 years behind that in terms of development and investment opportunities."
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In the rush to find the next great tech company, VCs eschewing the crowded scene in Silicon Valley are looking further afield for their gems. For some that means other cities in the U.S. and going to Europe and South America; and for Nexus Venture Partners, the answer is India, where it has focused its investment efforts since 2006, and will continue to do so, with the closure of a new $270-million fund, its third to date (the previous two were for $100 million and $220 million).

Backers of the fund, according to Naren Gupta, co-founder of Nexus, come primarily from endowments, foundations and financial institutions in North America and Europe, with only a smattering from Asia itself. “They see the Indian market as the market of the future,” he explains, with backers including organizations that have “done quite well in China lately and see India as 10 years behind that in terms of development and investment opportunities.”

It is not alone in eyeing up the subcontinent: investors like Sequoia (which often partners with Nexus on investments) has also figured strongly in this market.

As with past investments, the funding will be widespread — following what Gupta calls the ‘Index’ model of investment, modelled after Index Venture Partners, the firm that has done well picking key European companies that have been shown to have global reach, or a very strong regional play.

Nexus’ investments will primarily focus on early stage investments will be picked from a diverse range of areas — e-commerce, technology, Internet, media, consumer and business sectors (basically all good, disruptive Indian startups are open for consideration).

Gupta considers Nexus one of the top VCs in India at the moment, and as with top VCs in the U.S., it focuses not just on doling out money, but also cultivating the businesses that get funded with advice on strategy, hiring and more. In some respects this is even more essential in India than in the U.S.

“We feel that the new generation of enterprises needs to have deep operational expertise, but in places like India you don’t have the same depth of management experience. That points to some of the challenges in India, in addition to the whole VC investment space being relatively new. This is where we are very unique as a team.” Among that experience, Gupta founded Integrated Systems Inc (ISI), an embedded software company that he took public and subsequently merged with Wind River Systems. Wind River eventually was acquired by Intel.

To date, Nexus River has invested in some 40 companies, with several exits at a gain — which is why, Gupta says, previous backers have been reinvesting in Nexus’ funds. Exits have included Cloud.com (acquired by Citrix), Gluster (acquired by Red Hat),  DimDim (acquired by Salesforce), OLX (acquired by Naspers), and Netmagic (acquired by NTT).

Other investments have included Snapdeal.com (Ecommerce marketplace); MapMyindia (Digital Navigation); Komli (Online ad network); Prana (Animation services); Druva (computing End-point protection), Unmetric (Social media analytics for business applications) and Bigshoebazaar (Online wholesale cash & carry platform).



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