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Kripa Mahalingam

t was a balmy day in No­ vember last year when Lakshmanan Narayan. CEO ofUnmetric, flew down from Chennai to Mumbai to make his presentation to the formi­ dable team at Nexus Venture Part­ ners. Present at the meeting were its three founders, Suvir Sujan, Sandeep Singhal and Naren Gupta - while their combined business acumen would have made any en­ trepreneur nervous, Narayan was both anxious and hopeful. A few hours ofgrilling. and a sleepless ••• night later. Narayan had a term Nexus has been prominently able to manage sheet for S3 million from Nexus. '1 smart exits, thanks to its early-birdstrategy could have fished around for a bet· for makinginvestments ter bargain with other funds but I felt that the team at Nexus under­ stood our business really well. and would also be the ideal partners available for VCs, aren't easy ei­ to help us scale the business," says ther because there are too many "There are times when you Narayan. He was right. Not only variables involved. But Nexus is think the company may not go did Nexus help shape Unmetric's making exits look like a walk in business strategy. it also assisted the park - it has made six erits anywhere, but a year later. they are in building the company's senior over the past two years and. except the star in your portfolio management team as well as the one. all ofthem have raked in good -SANDEEP SINGHAl (8) advisory board. Unmetric is a profits (see: On a roJI). Sure, it part­ Co-founder, Nexus Venture Partners benchmarking company that tells nered with other VCs in most deals brands how they stack up against but its track record. stands outs in their competitors based on their an industry where you are only as social media strategy. good as your last exit. That Nexus is helping companies It's a combination ofskills that's "A good partner is one who scale up in every possible way ­ working for Nexus. Sujan, Singhal prevents the other from making and that in futuristic businesses and Gupta, who founded Nexus in a bad Investment like Unmetric, which are still their 2006. believe in consensus - all of infancy - is only part ofthe story. them have to agree before making -SIMR SIIIAN (M) What's amazing is how the VC firm an investment and "a good partner Cooloundef, News Venture Pllrtnefs is building something ofa formi­ prevents the other from making a dable reputation for. hold your bad investment," says Suvir Sujan. horses. exits. Here's how. co-founder. Nexus Venture Part­ Ask any venture capitalist and ners. They also tend to invest in "We mostly help in building the they'll tell you exits are not easy themes ahead ofthe market. and team and attracting people. When in India. Actually, it's mostly not which are yet to be proven. we approach people, it validates even in their hands. Unlike the us, They started investing in enter­ India is yet to see a slew ofbig. prise solutions and cloud com­ the team and the idea bang IPO exits for VCS - MakeMy­ panies in 2008. much before it -ANUP GUPTA (T) Trip and Naukri are exceptions. became fashionable to do so. ·We MarwlgIna; director, Nexus Venture Partners M&As, almost the only-exit route look at somewhat futuristic mar-

18 August 2012 / OutJook BUSINESS SOUIIlIKIWI

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ON A ROLL Nuw 1uu.fUn ma.rimum uitJ in the mterprUe andcloud &paCe

w GenerlII cmIyst. Bessemer\tiltltlft Par1nIls Founders Fund IIIld ON Capbl ~ q20tD 28.5 NA ..... -...... I/IdeII; \lentUres and Draper RIchards : Jan 2011 ae 31 '"""""'os i Valra : AuIl2011 1., NA CllltAl"", """ I,. \lentUres .nd RedpoInt \lentures i July 2011 11.6 2()()'250 QIlSJIR ..... ,_- i Oct2011 12.5 136 ISilicon Valley with Jishnu Bhat· ed almost 75% ofits funds across tracting people," says managing ta.charjee, principal. "In 2008, the 4O-odd firms. The team at Nexus director Anup Gupta. "When we need for storage was exploding sifts through upto 1,000 proposals approach people, it validates the and the costs were very high. We a year to pick out six to eight ven­ team and also the idea." felt people would need flexibility tures for investment. It doesn't come as & surprise that in capacity and cloud is the only The bet is always on the entre­ Sujan, Naren Gupta and Singhal solution that can give them that." preneur. "The business plan he have a strong history ofentre­ Their conviction has paid off' and presents in the beginning is always preneurship. Sujan co-founded Nexus is seeing some ofits biggest different from what the business Baazee, which merged with e&y exits in this space - Citrix Systems finally evolves into," says Sujan. in 2004 to form eBay India. Gupta took over the portfolio company, "The entrepreneur has to have the co-founded the embedded software Cloud.com. for over $200 million ability to listen to what the market company Integrated Systems Inc, in July 2011. Storage management is ..ying. adapt and make chang­ which he took public before merg­ company Gluster was taken over es." He must also have the abil- ing with Wind River SysteI1J5, in by Red Hat for $136 million in ity to hire and keep good penon­ turn acquired by Intel. Singhal an all·cash deal in October 2011. nel. especially when he has neither co-founded the Rupert Murdoch­ "Nexus is one ofthe few funds in backed eVentures, one ofthe earli­ India Uml invested in enterprise est VC" Mlt up in India in 1999 - it application and cloud companies," shut in 2003 and Nexus took over "Y' Panlg Dbol. managingdine­ its remaining investee portfolio tor, Inventus (India) Advisors. in 2007. Between eVentures and "They have leveraged their exper­ Nexus, Singhal also co-founded a tise in this area to identify some healthcare outsourcing finn, Me· winners early on and it has paid off dusind Solutions. The three know very well for them." enterprise is a roller coaster ride. Nexus operates out ofa combined "Since most ofthem at Nexus have corpus of1320 million. It has al­ eIperienee in building businesses, ready raised money twice, the first they know what it takes and the time in 2007. when Nexus India "We look at somewhat ups and downs that come with Capital I raised $100 million; its futunstic markets that may not it," says Amar Goel, founder and second fund, Nexus India Capi- exist today but will be a natural chairman, Komli Media, a firm in tal II, raised $220 mi.llion in 2008. which Nexus invested in 2007. Although the part.ne" refwe to progression sometime soon disclose their fundraising plans cit­ -NAREN GUPTA IKE FUTURE IS NOW ing regulatory constraints. indus­ Co-loundef, Ne:ws YentunI PMners Nexus primarily looks to invest try sources say Nexus is likely to in companies focused on huge op-

18 AuCust 2012 I Outlook BUSINESS " Exits are essential for the then, another segment where Nex­ start-up ecosystem to thrive. us has invested aggressively, cloud Nexus seems to have perfected computing, is estimated to grow to $130 billion by 2013, according to the art of X1t, Ig Gartner estimates. -PARAG DHOl That apart, Nexus has invested Managing director, Inventus (India) AdYiSOfS in Suminter Organics, which pro­ cures organic farm produce from local farmers and exports to inter­ ing revenues ofSIOO million in 2013 national marketsj Sohan Lal, an and is valued at $500 million. agri-Iogistics provider; and EyeQ, There's also Pubmatic, which has a chain ofeye hospitals focused on developed a platform that allows northern and western India. large publishers to manage their Right now, ofcourse, the finn is ad inventory on a real time basis betting big on social media. Gart­ to optimise pricing and maximise ner estimates put the revenues of revenues. Pubmatic has raised $63 social media firms at around 110 portunities, be they domestic or million so far. Nexus invested $7 billion in 2011, and expect it to global. Market opportunity is im­ million in it in 2008 along with He­ grow to $14.9 billion in 2012. -Till portant because it is impossible to lion Ventures and Draper. An IPO now, social media has been more build scale without it. "When we from the firm is said to be in the about fun. In future, it will have a set out in 2006, we believed there would be global companies coming out ofIndia," says Sandeep Sing­ NEXUS IS BETTING BIG ON SOCIAL MEDIA. GARTNER hal. "We are now seeing more ofit ESTIMATES SOCIAL MEDIA FIRMS WILL GROW FROM because entrepreneur confidence is high here and they [the entrepre­ $10 BILLION IN 2011 TO $14.9 BILLION IN 2012 neurs] can pick up international trends and work with them." offing, alongside rumours ofa $300 big use in business as well. It is still Another investment criterion for million buyout offer from Amazon. early days - it may not happen in Nexus is capital efficiency. "We are NeIlls' bet on both Komli and the neIt sil: months to a year," says typically an early stage vc fund Pubmatic stem from the strong Naren Gupta. He says NexllS is so we look for businesses that are future potential. According to backing enterprises building tech capital efficient," says Singhal. eMarketer, a firm that specialises platforms that allow companies to One ofthe firms Nexus has done in publishing data and insights in leverage social media - Unmetric well with is Komli Media, which the spheres ofdigital marketing, is one ofthem. There's also Salo­ has developed an online advertis­ media and commerce, the online riI, in which Nexus has invested ing technology platform. Komli advertising market is expected to $3.5 million along with Inventus raised $62 million and is growing grow from $68 billion in 2010 to Partners, which works with global rapidly, helped by sil: acquisitions $132 billion in 2015, accounting for brands to Simplify and scale their in the past two yean - it's target. 22% ofthe ad dollars spent. And. social media engagements. He is

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HONDA. IHonda Siol Power Products LId. ••lIn ",*w'eoltWI ,... oW:::';:';'",,,,", Mob.: 9999225157, 9873926636 I r,lIrrp"/w I VENTURE CAPITAL I also looking out for companies Not every theme has worked out is no telling which companies will like Genwi, which helps publish­ well. Nexus' bet on mobile value­ emerge as stars or come up a crop· ers deliver interactive content by added services, and investment per, the Nexus team says. "There creating apps on their cloud-based in companies like mobile2win in are times when you look at invest­ publishing platform for tablets 2006, haven't paid off. "We thought ments and think the company may and smartphones. "Tablets will be that once number portability kicks not go anywhere, but a year later, the most used technology plat­ in, value-added services would be they are the star in your portfolio," form after the mobile," says Gupta. the only differentiator that telecom says Singhal. "Then there are some Indeed, the tablet is expected to firms would have," says Singhal. companies doing well but could change the nature ofcontent ­ "Not only did number portabil- run into rough weather a year later books could be written differently, ity get delayed, telecom opera- because of regulatory changes." videos can be embedded, clicking tors got to keep the maximum The goal. he says, is to build com­ on which will lead to an interactive revenue share and there was not panies that can go public because eIperience with the reader, and the much money left on the table for that is where Nexus can maximise text itself will change because de­ returns. MEven in M&A, compa­ tailed eIplanations won't be need­ nies are willing to pay a premium ed. Nexus and Inventus invested $4 when they don't want you to go million in Genwi in October 2011. public," says Singhal. "When they realise you can't go public and HIT OR MISS the only hope is to sell out, they But.investing in futuristic mar­ get into competitive bidding and kets is risky. "There is a lot ofrisk that's not a good thing." Inventus' involved as one can never really Dhol feels exits are essential for be perfect when looking at the fu­ the start-up ecosystem to thrive ­ ture," says Gupta. "That's where they not only validate your belief the adaptability ofthe team comes in an investment but also the faith in." Like, there may be a big need investors have in a fund, which for storage but the solution the helps attract new investors. "Nexus team is suggesting or the market seems to have perfected the art of it is targeting may not be right­ "Most of them at Nexus have exiting," he says. whereas a team that can adapt will experience in building businesses; While it doesn't let exits dictate make changes and come up with they know what ~ takes and the its investment strategx, the team is the right solutions. Take the case mindful ofexit opportunities when ofthe open source web-conferenc­ ups and downs that comes with it it puts its money in companies. "It ing start-up Dimdim. It was ini­ -AMAR GOEL is the fund manager's responsi­ tially focused on the Asia.-Par.ific Founder & cllairman. Komll Media bility to invest in assets knowing market but soon realised its prod­ he can exit them within a certain ucts were better for small and me­ time frame," says Sujan. "You can dium businesses in the us - so it mobile VAS companies." Nexus take a call to wait while investing established its presence in Boston, sold mobile2win to Altruist in 2009 in your personal capacity, but you targeting the local market, and and continues to remain a share­ can't take risks while managing later got bought over by Salesforce holder in Altruist. It also got out of someone else's capital... for $31 million in January 2011. MagicRooms, the hotel room ag­ One last irresistible question re­ Nexus, along with Index Venture gregator. selling its stake to travel mains: where does Nexus see the and Draper Richards, invested 18.6 company Yatra in August 20ll,just next round ofexits? MThe whole million in Dimdim in 2007. about recovering the $1.5 million it online advertising space," says It did, however, miss not back­ invested in July 2010. Gupta. "When we invested in ing Naveen Tewari ofinMobi, now companies like Komli, Vdopia and the leading global mobile advertis­ NO FORMULA FOR EXITS Pubmabc about four to five years ing firm, which raised 1200 million So how does Nexus decide when to ago, we didn't expect the business from Softbank and is said to be exit a company? It's much easi- to scale up as quickly as it did. The valued $1 billion. "We didn't ex­ er to decide on investments that exits are going to be bigger than pect the team to go global so fast," aren't working out rather than fix the ones we saw in cloud." Watch concedes Sujan. on a formula for eIits; and lhere this space.

18 ~t2012 I Outlook BUSINESS