“Indian entrepreneurs are now beginning to think global and think big from day one,” says Suvir Sujan, co-founder and Managing Director, Nexus Venture Partners, a major venture capital firm that invests in early- and growth-stage companies in India and the US.

The entrepreneurs, according to him, are now thinking of building a company for the global market. He gives the example of Unmetric, a company based in Chennai in which Nexus has invested. It has offices in Chicago and New York and works with major brands and agencies to help them establish benchmarks for their social media teams and campaigns.

Not US-returned

The profile of the entrepreneurs is also changing. Earlier, it was mainly those who had worked in the US who were returning to India and setting up ventures targeting customers in the US. They knew and understood the US market and had a good idea of what their customers wanted. Now, the new generation of entrepreneurs has not worked in the US, but is confident enough to set up a business in India and develop and sell products to customers in the US.

This is a change, he says, that has happened in the last four-five years. Previously, entrepreneurs were quite happy to have a service mindset and build a technology for a customer in the US. Now, they are looking to develop products for the global market.

Part of this change is because the confidence of the Indian technology entrepreneur has increased, says Suvir, who has been an entrepreneur himself. A BS in Electrical Engineering from the University of Maryland and an MBA from Harvard Business School, Suvir was co-founder of Baazee.com, an online marketplace that merged with eBay a few years ago.

Having set up offices in India and developed products, the entrepreneurs look to move to the US and establish their business before moving back to India.

Product-based firms

Also, the technology companies that are coming out of India are product companies rather than those offering services. “We have seen a lot of that over the last two-three years,” says Suvir. The products are made in India for the global market. These companies sell the products in India mainly for proof-of-concept. Hence, their revenues in India are not big.

Hybrid model

“A lot of entrepreneurs say I am happy to test it out here and see if it is working, but for scale revenues I will have to leave the country,” says Suvir. This is also because Indian firms are still not willing, unlike those in the US, to pay top dollar for a technology that will improve business.

Nexus, which has about $600 million under management, adopts a strategy that is a hybrid between the China and Israel models. In China, all venture capital goes into businesses of domestic consumption. In Israel, venture capital is for cross-border companies – they build products in the country, but sell outside.

When it started in 2006, Nexus realised that for domestic consumption in India to scale, it will take time. It also bet on the fact that a number of Indians, who had studied and worked in the US, would come back and start ventures with US customers in mind. Their reasoning was that they knew people here and it will cost lower to start a company. And, says Suvir, it has played out the same as Nexus had anticipated, in the last seven years.

Nexus’ portfolio of 40-odd companies is evenly split between domestic consumption and cross-border transactions. Nearly 80 per cent of the companies it has invested in are tech and Internet and 20 per cent are traditional execution-based companies such as healthcare, education, agri-business and water.

“We continue to look at all spaces. When we look at domestic consumption, non-tech companies, we are looking at companies that have some process or business model differentiation,” says Suvir.

Nexus will invest right from the concept stage, when a new idea comes to an entrepreneur, to something that is pre-revenues – when the concept is out, the product is out, they haven’t any revenues but they have got some data testing going – to early revenue stage. It typically invests from $100,000 to $3 million and in the life of a company can do multiple rounds, going up to $20 million. It takes minority stake that varies from 20 per cent to 40 per cent.

ramakrishnan.n@thehindu.co.in

(Please send feedback, comments or suggestions to emergingentrepreneurs@thehindu.co.in )

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