Economic Times: Rituparna Chatterjee
In 1992, a bunch of Indians in Silicon Valley had formed The Indus Entrepreneurs (TiE) to help and guide fellow Indians. Almost 20 years later, it's a different world where Indians no longer need handholding. But TiE is hardly irrelevant. It has diversified
to not just include non-Indians, but also fund their ventures through its TiE Angels initiative, started in August 2010.
"Entrepreneurs are always looking for money. It baffled me that TiE was not fulfilling this fundamental entrepreneurial need,” said Venktesh Shukla, Chair, TiE Angels. Unlike a typical VC firm, it doesn't have a fund and is led by a bunch of individual TiE
investors. Entrepreneurs make their pitches, TiE's angel investors grill them and if convinced, fund their ventures focussing on merit, not on nationality.
Typical investments run below $1 million. So it's not for companies looking to scale up. So far, TiE Angels has invested $6 million in 14 start-ups, 50% of which are led by people who are not of Indian origin.
"Most of our start-ups don't have an India angle. India is more of a hope than a reason because everybody has India on their mind as a potential market and hope that this group will help expand into India,” said Shukla. Away from the Valley, the Boston chapter
of TiE is also setting up an angel fund.
YaTown (a neighbourhood network), Vigilent (a provider of datacenter energy-management systems for enterprises) and Focal Point Energy (a manufacturer of industrial-scale solar thermal systems) are among the start-ups funded by the Valley's TiE Angels.
"Our TiE Angel investors definitely offer both the ability to help grow our business in India, and also provide connections to suppliers to the solar industry in India,” said Taber Smith, CEO, Focal Point Energy. "We currently do not have a presence in India,
but will be expanding there in the future through our TiE Angel investors.”
Non-Indians come to TiE Angels for "intelligent money”. This means leveraging the expertise and influence of TiE members for all kinds of things: advice, recruiting, running the company and even raising their next round of funding from a mainstream venture
capitalist. For many months, Vigilent President Mark Housley's sales team had been hunting for the right contact at a Fortune 100 IT company.
When Housley requested for TiE's assistance, he was almost immediately connected to the person. Shukla shares how another entrepreneur got funding offers from two VC firms. The first wanted exclusivity while the second offered less money but allowed the entrepreneur
to maintain his links with TiE Angels. He went with the second option. "So it's something invaluable,” said Shukla. "And this is the next wave for TiE.”
The success of The Indus Entrepreneurs (TiE), a networking group set up over two decades ago by Indian technologists in the Valley, has done much to boost the growing profile of Indians as angel investors in the US startup ecosystem.
Veteran investors such as Kanwal Rekhi who founded early-stage venture fund Inventus Capital Partners said the rising graph of Indian origin investors is a result of early gains recorded by TiE. "The US State Department brings delegations from across the world
to us (TiE) and uses us as a role-model,” he said.
Much of this attention is also due to the rise of India as a market for cutting edge technology. In 2009, when Nexus Venture Partners funded US-based start-up Cloud.com, founded by Sheng Liang, it provided the fledgling firm with access to the Indian market.
In two years, Cloud.com went on to bag its largest customer in India, Tata Telecom, and set up its largest development centre in Hyderabad.
"We feel that this trend is likely to accelerate as emerging markets absorb an increasing percentage of innovative products and services,” said Naren Gupta, co-founder of Nexus Venture Partners. Agreed Rekhi of Inventus: "We serve as gateway to the huge opportunities
in India and also help them reduce costs by recruiting engineers in India.” But the India connection is not the only factor that is drawing global entrepreneurs. The community is now regarded as savvy and well networked.
Adrian A Nazari, founder and CEO of Credit Sesame Inc, a Sunnyvale, California based start-up that helps people manage credit and loans said, "Indian investors and entrepreneurs have a very good reputation here.”
Nazari, who founded the start-up in November last year, decided to choose Inventus Capital Partners to back him up and raise first round of funding in 2010. "Kanwal and Inventus got the idea very quickly,” Nazari added.
In addition to the funding, Indian investors are also able to provide mentoring and strategic and operating assistance. "Indian investors have a broad perspective that combines understanding of US, European innovation and emerging market dynamics and so will
increasingly be in demand,” said Gupta of Nexus.
The growing confidence in the ability of Indian investors is also reflected in the organisations that are placing their funds in venture firms run by Indians. AT&T's pension fund has invested in Inventus, said Rekhi.
The younger generation of successful Indian-origin entrepreneurs is also turning angel investors. Sundi Natarajan, co-founder of Virginia-based Sparksoft Corporation and a member of the Indian Angel Network (IAN), has invested in a couple of US based startups.
Natarajan is mentoring US based education start-up PrazAs Inc and Indian health monitoring and tracking start-up Wellth, focused to tap the India market. "Gone are the days when India was considered for labour cost arbitrage. Everybody is forecasting that
30-40% growth in business will come from Asia Pacific,” said Natarajan.
(The views expressed above are the personal views of the author)