Russian conglomerate Sistema JSFC is aiming to invest in two-three Indian start-ups every quarter as part of its plans to scale up its presence beyond telecom.

The company has already launched a ₹340-crore fund called Sistema Asia Fund (SAF), which has a five-member team, including former Helion Venture executive Dhruv Kapoor.

Speaking to BusinessLine , Vsevolod Rozanov, Senior Vice-President and Group CFO of Sistema JSFC, said: “We at Sistema JSFC feel the time is right for us to invest in India through SAF, as earlier, the market in the start-up investment space was over heated. But we are still taking a cautious approach and not rushing in.”

Sistema had earlier entered India’s telecom sector by picking a stake in Shyam Telelink to form Sistema Shyam TeleServices Ltd (SSTL). However, the company’s ambitions were hit after the venture’s licences were scrapped post the 2G spectrum scam.

RCOM merger

Although Sistema Shyam bought back spectrum in few circles through the auction route, it has now decided to merge its operations with Reliance Communications for a 10 per cent stake.

“After the merger with RCOM, the team here is naturally forced to think about new business opportunities. We have developed a team that has an understanding of how business is done in India. We have developed a strong set of connections. Our Chairman is committed to developing business,” Rozanov said, adding that Sistema would have invested in start-ups even if its telecom venture had succeeded in capturing market share on its own.

While Sistema has invested nearly $4 billion in the telecom venture, it is now looking at smaller ticket size in the start-up world. Since its inception earlier this year, Sistema Asia Fund has invested $12 million in Seclore, a Mumbai-based technology firm co-founded by ex-IITians.

The Fund also invested recently in Qwikcilver, a gifting card solutions provider.

“We are looking to invest in more Indian start-ups. In addition to capital, we offer our expertise and enable the company to expand their business beyond India to markets like Russia and even Europe,” Rozanov said. Indian start-ups have never had it so good, with a number of international companies, including Google, Facebook and Apple looking to invest.

But at the same time, there have been instances of failures and closures of ventures due to poor business models.

Rozanov acknowledged there are significant risks associated with investing in start-ups. “Sistema Asia Fund took its time, looked at more than 70 opportunities and then invested in two companies. Basically, we have looked at companies that are either OIBDA-positive or have a clear path to becoming OIBDA-positive,” Rozanov said.

“We also have very frequent and intense meeting with the management team of companies. In spite of all this, investments by SAF are not risk-free and returns from companies where we have invested will take time. Typically, monetisation in invested companies typically could take 6-7 years,” he added.

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