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If you want to do something, don’t over-analyze it! We do mostly Series A Funding! Helion Ventures #ThinkInvestor

ThinkInvestor is iSPIRT and ProductNation’s new initiative to serve as a catalyst between Venture Capital firms, Angels, Angel Networks and Entrepreneurs. It is to go beyond brochure ware and dig deeper into the whole life cycle of a typical investment; from introductions, funding, styles of on-going engagement, to exits. And in the process, capture their views on global and local trends, and the entrepreneurial ecosystem in India. This interview is done with inputs from Shashi Bhagnari.

think-investor-helionHelion Venture Partners is a $600 million venture fund focused on India with offices in Bangalore and Delhi. The company is an early to mid-stage investor in Indian startups in sectors such as Enterprise software, Internet, Mobile, Outsourcing, Retail, Education and Financial Services. In a conversation with iSPIRT, Helion’s Alok Goyal, Partner, talks about the company’s funding strategy, evaluating projects and making the right investments.

Tell us about the company’s background. What is its focus? What is your current fund? What is it looking at?

We formed the firm in 2006 with four founders that included Ashish Gupta, Sanjeev Aggarwal, Kanwaljit Singh and Rahul Chandra. Besides our team of analysts, our CFO doubles up as an operating partner for finance. We also have an HR advisor who works closely with our portfolio companies. We recently got someone in Product Management from Google to help portfolio companies. We are now a group of 15 people and have our offices in Gurgaon and Bangalore in India.

We focus our investments on early to mid-stage ventures, investing in technology-powered and consumer service businesses in sectors like Outsourcing, Internet, Mobile, Technology Products, Retail Services, Healthcare, Education and Financial Services. We have done about 60 investments so far.

In our current fund, we have raised about $250 million. The focus of this new fund will be divided between technology side and tech-enabled consumer investments. We will continue to look at Internet services like Makemytrip where we invested earlier, taxi services like TaxiForSure etc.

What’s your strategy on verticals? How do you characterize them?

Within e-commerce, we are bullish on Internet-only brands and marketplaces. For example, YepMe–a Web only brand focused on tier two and tier three markets. We have also invested in a venture called ShopClues which is an eCommerce marketplace.

Within consumer services, we have invested in consumer facing travel ventures like TaxiForSure. We have also made an investment in a company that makes planning travel experiences much easier. We have also funded a housing and real estate venture, Housing.com.

What stage of investment are you most interested in? Seed funding or later stage investments?

We are mostly the first or one of the first institutional investors in the company. Our sweet spot would be Series A or Series B funding. I would imagine 70 to 80 percent of our investments are in Series A. We invest between $10 to 20 million over the lifetime of an asset.

Any interesting investments you have made recently?

We had been looking at investments in the healthcare sector for a while now. We have recently invested in Denty’s, a chain of dental care units. This Hyderabad based company focuses on dentures, jaw replacement and other high end dental care treatments.  We have also invested in the area of enterprise mobility, in a company called Rapid Value that provides services in the area of mobilization of enterprise applications. Another recent investment is Linguanext, which has created a unique technology for language translation. It allows Independent Software Vendors (ISVs) and enterprises to translate any application from one language to another without any changes in the application itself.

How do entrepreneurs get in touch with you? Is there a defined process they need to follow?

Entrepreneurs are at the heart of the venture capital eco-system. It is as much or more of our job to find entrepreneurs than they reaching out to us. In fact, we use a lot of our bandwidth to get to reach out to entrepreneurs.

Entrepreneurs are most welcome to reach out to us directly. There are two ways entrepreneurs typically get in touch. First is through our personal network. Second way is through bankers. We also like to make ourselves visible in forums and events so that entrepreneurs can reach out to us and we can reach out to them.

We also have a strong outbound program through a team of analysts.

What is your due diligence process? Is it specific to all?

We view around 1500+ business plans each year. The process is similar for most. Usually the first meeting takes place with one of our analysts, unless it comes from personal contacts. Different analysts focus on different areas and they all gain a good idea after the first meeting, which is then followed up with another meeting with one of the partner(s), to understand the business better.

Due diligence for us is more Market Diligence. We also do primary research, secondary research and make reference checks. After we are through with the entire due diligence, we invite the entrepreneurs to present their business plan to the whole team.  If the partnership is positive, we issue a term sheet after which financial/legal due diligence cycle along with documentation is completed.

The entire end-to-end process is completed within a month and a half typically.

How do you interact with your entrepreneurs? Is there a process outlined for this?

Investment is not only about money. We have developed reasonably strong relationships with our entrepreneurs which begins when we start the process of due diligence. We have both formal and informal interactions on a periodic basis.

In the early stages, face-to-face meetings are held every quarter, in addition to monthly calls. But outside of that, we do not interfere in their work at an operational level. But entrepreneurs reach out to us whenever they need help. For instance, if they need clarity on product direction or to connect with other prospects, they contact us. Those interactions are in fact, quite regular. However, I personally find myself being in touch with them on a very regular basis.

Do you have any avenues where you meet your portfolio company CEOs informally during the year?

Yes, we are doing this once a year. We have also started to form groups now. For instance one group that focuses on product management can share tips with portfolio companies in that area.  We also reach out to our portfolio companies through webinars.

Tell us about your recent exits? What do you think of the climate for exits in India like?

We are just an eight years old entity, so there have not been too many exits. Our first was an IPO exit from MakeMyTrip when they went public. We also exited redBus when it was acquired by Naspers. Then we got out of Amba Research. We are hopeful that the market climate in the next few years will get a lot better for favorable exits.

What excites you about entrepreneurs these days, and what is it that you like to see in them?

In all my discussions there is a general belief that the quality of entrepreneurs has gone up significantly. We are also seeing a whole class of entrepreneurs moving back from the US. We are seeing a generation of entrepreneurs starting their second ventures now. Their scale and thinking is different, very bold.

What we’d like to see is stronger talent in Product Management. It is relatively more difficult in India compared to a place like the Bay Area. We are also not seeing as many deep technology assets. What we are seeing are more applications based and light IP based businesses from India. Over a period of time, I have no doubt that India will create more deeper technology companies as well.

What advice would you like to give young guys who want to start a new venture?

You should ask yourselves if you have the entrepreneur inside you or not. If you are over analyzing, you are probably not. An entrepreneur has to be “foolish” enough to purse the dream besides being passionate about it. If you want to do something, don’t over-analyze it. The important thing is the ability to take the plunge.

Entrepreneurship is not a solo sport; but a team sport. You need to find complementary capabilities in others. The bottom-line is that you should be able to pull together a team that has complimentary skills and the same passion to do it.

A startup is successful because it is focused. Defining that focus is important. Startups succeed because they choose a specific market segment or a specific problem or a specific customer set etc. and serve that market better than anyone else.

Lastly, it is important to be close to the market. You need to continuously listen, learn and act with agility. It is important to be able to iterate quickly. 

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Yes! We invested in Little Eye Labs! Lots of interest in Healthcare too! – Ventureast #ThinkInvestor

ThinkInvestor is iSPIRT and ProductNation’s new initiative to serve as a catalyst between Venture Capital firms, Angels, Angel Networks and Entrepreneurs. It is to go beyond brochure ware and dig deeper into the whole life cycle of a typical investment; from introductions, funding, styles of on-going engagement, to exits. And in the process, capture their views on global and local trends, and the entrepreneurial ecosystem in India.

ThinkInvestor-VentureEastVentureast is an Indian VC fund manager with close to $300 million under management. They have a history of investing in innovative businesses across multiple sectors, and multiple stages of a business – from seed and early to growth stages.

Guided by the singular credo “We Differentiate, You Win”, Ventureast has enabled over 60 businesses in Technology, Life Sciences and emerging sectors to become leaders in their individual spaces. The company has a proven track record of investments and exits, aided by a strong founding team which has been with Ventureast for over 15 years and who understand the entrepreneurial ecosystem well.

The Ventureast Proactive Fund, Ventureast Life Fund and Ventureast Tenet Fund II feature a wide investor base (Limited Partners) consisting of institutional investors from across the world.

They were in the papers recently when their investment, Little Eye Labs, was acquired by facebook.

ProductNation sat down with Sateesh Andra, Managing Partner, and Dr. Ramesh Byrapaneni, Venture Partner of Ventureast Tenet Fund, for this interview. Here’s what we heard:

 

What kinds of start-ups are you interested in? What’s your stage of investment and typical investment size?

Sateesh AndhraOur fund invests exclusively in IP-enabled companies. We are interested in Internet and Mobility related plays. We are very interested in enterprise focused start-ups among these. We are very interested in Healthcare and Healthcare related Information Technology plays also. We are interested in companies that address inefficiencies in areas such as Education and Finance with technology solutions. The filter that we use is that these companies address global opportunities in South East Asia, Europe and the US. We found a gap in the Indian VC market between what Angels can provide start-up companies with and Series A venture investors. In our current fund, we invest up to $1M a company. In our next fund we are planning to increase this to $1.5M to $2.0M per company.Most of our investments happen at the concept level; they understand the concept well, there is a prototype, and some early revenue validation.

How does an entrepreneur get your attention?  How does an entrepreneur get in touch with you? What’s the initial process like?

Dr. Ramesh ByrapaneniEntrepreneurs get in touch with us in a variety of ways. We are panel sessions in conferences and some get in touch with us there. We also get introduced to entrepreneurs and start-ups are demo days at accelerators. Sometimes investors in incubatees at these places introduce companies to us. Introductions through our professional links and references are always welcome. Look us up in social media like LinkedIn and Twitter. See who we follow there.  We have  also engaged with entrepreneurs and start-ups that have come in with a nice relevant email. They are all good people to introduce you to us. Our big expectation is for you to know us as an investor before you pitch us! Out initial process is quick. After an initial meeting we would let you know in an upfront and candid way, whether we would invest or not. We provide candid feedback on why we are not investing. Entrepreneurs may not like it but these are only the reasons why it does not make sense for us.

Let’s say you are interested in exploring a company further? What happens next? What are your typical due diligence efforts? How long does it take for an investment?

We have a very strong team on our side that can evaluate the Product Market fit for the start-up we are looking at collectively. It is fairly important to us. In early stage start-ups creating the product is easy. Achieving Product-Market fit is tough. From a Product Management/Product Marketing perspective, we look at the value proposition and how they address customer requirements. At an early stage, start-ups may not have a crystal ball but we still need to see 12 month metrics; Profit & Loss and Cash Flow projections. They need to have a decent idea about these. We also dive deeper into distribution channels, feet on the street. The initial team is also critical. The timeline for investment decisions vary. Some take only 2 to 3 weeks if they already have a lot of traction. Some take 6 weeks and some take 8 weeks if there is a lot of financial due diligence to be done. Companies are doing pivots take longer. If there are regulatory frameworks involved as it happens sometimes with healthcare investments, it may take much longer.

How hands-on or hands-off are you with your portfolio company? What’s your style of engagement with a portfolio company?

This is a tricky question! We are not the kind of investor that drives from the back seat. We don’t dictate that this is the way it needs to be. We ensure alignment. In one of our healthcare start-up companies, post-operative care after a stay in the hospital was important. We got involved in that case and helped arrange things.  We do monitor a simple set of metrics depending upon the company. We monitor the number of product releases, beta customers, etc,.We also monitor how our portfolio companies incorporate feedback they receive.  We don’t give the portfolio companies all of the money upfront. They are done in stages and closely track progress they are making. We make introductions, go on cold calls with the portfolio companies once a month. There are quite a few informal meetings along with the formal ones. We engage with quite a few CIOs and do introductions as appropriate. Our style and approaches are different for different companies. There is no single formula.

Let’s talk about your interest in Healthcare and Healthcare IT Companies. Tell us about some recent investments. What kinds of things are you looking for in this area? What excites you in this area?

SmartRX is an investment of ours that serves post-operative care of patients. Usually after operations in hospitals, when patients are leaving for home, prescriptions are gone over and that’s where it ends. It becomes very difficult to make sure that the patients are taking their drugs properly. Doctors find it difficult to communicate after that with patients and vice-versa. SmartRx ensures that periodic messages are sent to the patient; common do’s and don’ts. Patients can also have small consultations back with their doctors through SmartRX. This is focused on the US Healthcare Market and is related to Meaningful Use Stage 1 and 2 of the Healthcare Reform effort going on currently in the US. The founders for this company were with Microsoft in the US, came back and started this company. To us, domain expertise is key, as in Healthcare and Healthcare IT start-ups..

We recently invested in OneBreath, a medical device company. OneBreath makes portable ventilators that have the same functions as  expensive high-end ones but at a tenth of the cost. One of the founders is on the West Coast of the US and this is targeted towards the global market. We help portfolio companies get the CE Marking so that they can target Europe and other markets if we think FDA approval for the US market may take long.

We invested in Seclore, an Information Rights Management company incubated at IIT Mumbai.  Their solution enables organizations to manage information access policies through the cloud. It enables their clients to manage access to documents across computers and tablets. 50% of their customers are in Europe or the US. It is one of the cool companies to watch for.

HealthHero created a device that resided with the patients, monitored vitals such as Glucose, BP levels etc. Patients can input the readings into these devices, doctors and nurses can analyze this data remotely and get back to the patient if necessary. This is now part of Bosch Telehealth.

We are very excited about the use of Smartphones in healthcare – they are the last mile to patients!  They represent a humongous opportunity! The computing power within Android and iOS devices make possible some radical disruptions.

 Now, let’s talk about Exits. What do you see coming in this area?

The Nest Acquisition by Google shows how much they value vision. Our belief is that you need to create value for exits. With a little bit of luck and timing this will happen! Exit multiples are very important to accelerate exits in general.  The macro trends are very positive! We have seen some exciting exits; Portal Player acquisition by NVIDIA, Qontex, a spin-out from Pramati Technologies was acquired by Adobe , Yasu Technologies, a Business Rules Management System company was acquired by SAP. Healthcare, Pharma and Biotech companies are all seeing momentum right now. We are seeing a lot of investments in cloud based Value Added Services companies; distributed applications and globally relevant!

What about some parting thoughts for entrepreneurs?

Just wanted to reiterate what we are looking for in start-up companies; a strong product management team with strong technical skills, ability to look at things from a customer angle, sales and marketing knowledge, excellent people management skills. We are looking primarily for deep understanding of technology, clear understanding of the customer landscape and excellent program /people management skills!