The Hindu Business Line : Tech as big differentiator

He's a stranger in a strange land that is brimming with opportunities, but he's certainly no stranger to collaborating with entrepreneurs of Indian extraction to build world-class companies. Meet Mark Sherman, General Partner at Battery Ventures, who has set up base in India to replicate his company's American success stories in India in the age of Web 2.0.

A self-confessed ABCD, by which he means "American Born Commuting (to) Desh," Sherman "firmly believes" that India will become one of the core venture hubs of the world, following Silicon Valley and Israel. He has been visiting India often for the past few years in an attempt to better understand its markets.

"I see many more Indian-based management teams as they visit the Bay Area to visit customers, partners, family, etc. I hope to relive the good parts of the tech boom of the 90s while India emerges as an exciting emerging market of venture capital activity."

He's on the board of the Silicon Valley Chapter of the US-Indian Venture Capital Association (US-IVCA) and is actively involved with TiE (The Indus Entrepreneurs).

And how has the Indian experience been so far? "Great. Personally, I have really enjoyed absorbing the many facets of Indian culture...my wife and I have always loved the food. Each time I visit India I try to take in a little more of the sites, be it tier 1 cities, secondary cities (such as Mysore) or relaxing spots such as Kerala and Goa."

While soaking in the sights and sounds, along with the cuisine, he has also carefully studied the entrepreneurial activity and growth opportunities here, which culminated in Battery investing in Travelguru, an online travel solutions provider.

Though unwilling to comment on what prompted the investment in the crowded online travel space, Sherman is candid in the kind of companies Battery is looking for. "We are interested in services companies that have some sort of technology advantage. We focus on companies where technology is a significant differentiator - for example pure IP companies (semis, software, infrastructure), consumer finance, consumer Internet, mobile, technology-enabled services, BPO and ITES."

A fairly wide range of sectors to choose from, which makes it clear that Battery wants to ensure it does not miss out on any possible opportunity. Moreover, the company is willing to join hands with other funds in exploiting an opportunity and invest at later stages too, both of which have been demonstrated in Indian investments so far.

For Travelguru it teamed up with Sequoia Capital, and in the case of Tejas Networks, a Bangalore-based optical networking company, existing investors, Intel Capital and IL&FS also participated in the Series C round. "In the US, we are stage independent, which means we make investments in seed, early stage, early emerging (revenues ($1-10 million), late stage and private equity-oriented transactions."

How has the experience been, professionally? "There are tonnes of things going on with people of Indian descent. In India Tejas and Travelguru are obviously doing well. In the US too, many of our best portfolio companies have Indian CEOs/founders. We have a tremendous portolio of NRI-run companies — such as Bladelogic, CipherTrust, Lara Networks, MCA Solutions, Neoteris."

Sherman in bullish on the entrepreneurial and venture capital culture in India. "It will be interesting to see how the culture develops in India. I firmly believe that we are in the service business to the best entrepreneurs in the world. If we find and help the best entrepreneurs build their businesses, they will want to work with us again and they will tell their mentees, friends and colleagues that they have to work with Battery Ventures. If we service these entrepreneurs well, then our returns will continue to be top tier."

And how does Battery ensure that its returns continue to be top of the league? By playing an active role after investment. "We are active and almost always take a board seat." He is quick to add that Battery takes care to ensure that they are "focused on being involved without being meddling."

After all, great VCs have to balance monitoring their investments with delivering business building assistance. "Experience has helped us to keep the `monitoring' bit efficient."

According to Sherman, great VCs differentiate themselves by "good thinking about strategy, insightful benchmarks on operations or negotiations and helpful introductions to people, customers or strategic partners."

Battery's long-term history of building market leaders, he adds, demonstrates the firm's passion for working with entrepreneurs to build their businesses.

And just important is the quality of entrepreneurs to collaborate with? "Our best investments generally are with the best management teams. There is no substitute for high quality people."

The company is also on the lookout for consumer Internet companies, particularly those with a heavy mobile angle. Sherman also believes that there are numerous other categories with gaps that seem to be ripe for opportunity.

"We are looking for both content players as well as their associated ad networks. While we recognise that these spaces are very young, we believe that, like in the US, omni-channel plays will become important over time."

He hastens to add that this does not mean "knocking off" US consumer Internet companies in India is a recipe for success. "It's only to look at a starting point of categories and then think about the Indian end-market and competitive/co-operative ecosystem."

According to him, some of the best Indian companies in this segment will come from categories that are yet to be identified. And he wants to ensure Battery is there right at the forefront, playing a crucial role in fashioning that next big Indian success story, one that addresses a large market, has very strong leadership and proves it can deliver innovative offerings as well as execute on sales and marketing.

(Battery has been investing in technology and innovation worldwide since 1983. It has supported many companies such as Airespace (acquired by Cisco), Akamai, LIFFE (acquired by Euronext), Neoteris and SigmaTel.

Mark Sherman previously worked with Robertson Stephens, Lazard Freres (mergers and acquisitions group) and McFarland Dewey. He holds a BS from Wharton School of the University of Pennsylvania and an MBA from Harvard Business School.

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