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ISSUE 5 | 2014

IVYSCOPE

coming of the new government,impact on the vc industry

cover story

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CONT

ENTS

VC INDUSTRY IN INDIA

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16

pg

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An introduction to this issue from the Founder and Managing Partnerof IvyCap Ventures

In conversation with the board of advisors at IvyCap and their viewpoints on the developments in the VC space

IVYCAMP

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A Conversation with the former Home Secretary and the Chairman of IvyCap Ventures - GK Pillai on investments, and how the change in government will affect the industry

A feature on IvyCamp - the unique venture funding and case study competition by IvyCap Ventures, aimed at top institutes in the country. In conversation with the creators of the competition.

FOREWORD

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Ashish Wadwani - Managing partnerat IvyCap Ventures analyses the industry in India and it’svarious aspects

WORD WITH THE CHAIRMAN

NEW TALENT. FRESH APPROACH

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Aakanksha Sharma, newly appointed associate at IvyCap shares her experience of working at a VC firm and talks about how new talent can both add value to the industry and gain from it

BOARD MEMBERS OF IVYCAP

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Expected impact of the new govern-ment on the VC Industry and IvyCap Ventures

COVER STORY

4pgPORTFOLIO UPDATES

An update on the performance of the four companies in IvyCap’s portfolio

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liquidation, whichever is the best way, in a reasonable period of time. In many countries, such funds are present, which helps in restoring investor confidence. For example, if you look at the MCX and NSEL case, had a risk fund like that been in place, it could have paid off the investors at least 80% of their money. Later on, it could have worked with MCX to recover that money. The investors could have gotten 80% of their money on the spot rather than wait 10 years for the same. So, such instruments are needed to give comfort to both the industry and the investors.

Is the system here as supportive of entrepreneurs as in some other countries, say the US?In entrepreneurship, India should not be as low if we look at the global ratings. But if you look at the cost of regulation here, a study says that it is as high as 28%-35%, which also includes the cost of petty corruption to an extent. So, for a young entrepreneur wanting to focus on business, this is too much of a hassle. If money has to be spent on compliance, it should be brought down to less than 5%. Also, with the new Companies Act, they have increased the regulation even more. For people willing to comply, they have made the process so difficult. So, such issues should be addressed going forward.

Do you think IvyCap Ventures is well placed to be reap the benefits of the changes in the external environment?Our first fund is going to be closed pretty soon now. So, it’s not going to help us directly in the fund raising

G.K. PILLAIA WORD WITH THE CHAIRMAN

G.K. Pillai, IAS, is a distinguished alumnus of IIT Madras and belongs to the Kerala cadre of the Indian Ad-ministrative Service (1972 batch). He is the former (recently retired) Union Home Secretary, Commerce Secretary and Secretary of the Department of Justice, Ministry of Law & Justice.

part. But if these regulatory changes and policy changes do come, they will help the entrepreneurs who we have supported by way of investments. So it will help them in accelerating their growth plans and increase their turnover continuously and later on, that benefit will accrue to IvyCap indirectly. Also, when we go for our second fund, it will help us generate a better response.

What is your view on the investments made by the fund already and the deals currently in the pipeline? I think the investments that have been made so far and the ones currently in the pipeline, have been finalised after an extreme sense of due diligence. We are very hopeful that these investments will fructify in the next couple of years. In due time, when we exit these investments, we hope that we would be able to give returns in excess of 25% to our investors. Also, for the second fund, we hope to have a slightly larger fund. We hope to then be able to cater to a variety of projects, with the experience that we would have gained by then. Going forward, we should expand our pool of investments and create value for a much larger set of entrepreneurs.

What qualities do you think the team should have and how do you rate the current team on these qualities?Basically, they should be having some experience in dealing with such investment projects. That aside, I think they should also have an element of what I call a risk taking appetite. Along with due diligence, they must also see the potential of the investment. They should share the excitement and vision of the entrepreneur. I think the current team is very highly qualified. The investments that they have cleared have been of very high quality. And we hope that the coming projects will continue to be of the same high quality. The economy is changing so fast and the technology keeps getting updated in no time these days. So I guess that going forward, the team will need to up the ante even more and clear the proposals more promptly to match up to that pace.

Do you see more foreign investment in the VC space as well?There is of course a requirement for the same, but some regulations like FDI are a roadblock and they need to be relaxed. There is a mismatch between the entrepreneurs’ need of funds and those available in the system. Also, in India, there is a basic requirement for a ‘Risk Fund’. When enterprises get into trouble, they should receive aid in either addressing the problem or

With the new government coming to power, what do you think would be

the impact on the Indian economy and the investment climate in the country?The newly elected government should have a positive impact on the Indian economy as a whole. The government has promised to work on the ease of doing business in India and we are hoping that in the next budget session, specific policy guidelines should be announced regarding this. In the current scenario, we are ranked 134thin the world, the new government can bring it down to 50. I don’t think it is very difficult to get there. One of the very first elementary steps is to learn to trust business. If anybody is lying or is making a false statement, he should be punished, but otherwise if he is saying that he is in compliance with the law, it should be accepted. Also, the govt. needs to take a look at the number of sectors which need FDI and the multiple projects which have been in the pipeline for a number of years, either because of environmental reasons or regulations. 26

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18BOARD MEMBERS OF IVYCAP

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I welcome you to the new comprehensive version of our quarterly magazine IvyScope.

This newsletter is another aspect of our drive for promoting innovation, not just in our approach towards venture capital investing but also in terms of communicating with our vast and thriving ecosystem. In this edition, we will give you a sense of the new developments and trends in the market and how that impacts us. We will also cover the latest update on the fund, the performance of the portfolio companies, future plans and IvyCamp – the first of its kind business plan and case study competition from the house of IvyCap. Lastly, our esteemed mentors and advisers will share their entrepreneurial experiences, their views on our fund and what lies in store, with changes happening in the external environment.

FORE

WORD

I am pleased to inform you that our Board has decided to close the fund by June 30, 2014 and you will soon hear a formal announcement of the same. A detailed notice will be circulated to all the investors as well. The initial target set by us was INR 200 crore and the fund is already over-subscribed by a good amount. The achievement is all the more significant, considering the difficult fund raising environment prevailing in the market for quite some time now. The credibility of IvyCap is further validated by the fact that most of the largest institutions in the country have invested in our fund and two of these institutions have already topped up their initial commitment, even before the final closing of the fund. A significant contribution has come from our vast IIT Alumni ecosystem as well. I want to thank all our investors for displaying tremendous faith and confidence in our abilities and we hope that our association continues in the coming funds as well.

We have completed four investments as on date. The companies in our portfolio are Reuters Market Light (RML), Aujas Networks, FieldEZ Technologies and Vinculum Solutions. Another two investments are in the final stages and should be announced soon; one is an online custom clothing company and the other is a dental labs company. Post these two investments, around 50% of the fund would already be committed.

Reuters Market Light has grown substantially since our investment and

is moving towards becoming a global leader in their space. They are exploring newer avenues, other than the existing business model of disseminating agri- related information to farmers via SMS. They have developed a first of its kind farmer connect platform called ‘Krishidoot’, which is like a marketplace for farmers, seeds/fertilizers producers and buyers to transact online. Many crores worth of transactions have already taken place and a huge value potential lies here. The company has recently won the ‘Marico Innovation Award’ for its approach and ideology and was recently covered in India Today as one of the top innovators in the country.

Aujas Networks, another portfolio entity, has rapidly grown its business in India and is now tapping the US market for further expansion. Given the growing data volume and new developments in data management, a huge growth potential lies for Aujas, which provides specialised solutions for cyber security and data management. The company is well on its way towards achieving a 100% growth y-o-y in its top line in the current year. IvyCap has already received some interest for a possible M&A opportunity for this company but we want to wait a couple of years to realize the true value of this investment.

FieldEZ Technologies, which is our earliest stage investment, has already started making an impact with an increase in the user base from 15,000 to 23,000 in a very short duration. What continues to excite us is the uniqueness

VIKRAM GUPTAFOUNDER, MANAGING PARTNERIVYCAP VENTURES

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and Marketing in the software industry and is an alumnus of IIT Delhi and Stanford University. The other core member of the IvyCamp team is Shirish Potnis, an alumnus of IIT Bombay and IIM Calcutta, who has over 30 years’ experience in diverse industries. With this driven and credible team and the uniqueness of the IvyCamp initiative, we have already received significant interest from corporate and media sponsors to associate with this competition, which will be launched in the next couple of months. We are very excited about this event which will promote entrepreneurship and contribute to the larger ecosystem.

We are now well positioned to start working on our next fund, which is targeted at $100mn with 70% coming from international investors. Given our track record, the value generated by our first fund and our vast ecosystem, we anticipate a very positive response for our second fund. Already, we have received multiple queries regarding the same from both Indian and institutional investors. The renewed positive sentiment created by the new government should also boost investor confidence and enhance the prospects of our fund and the industry in general. The second fund should start gaining traction in the next couple of quarters, after a significant percent of the current fund is deployed. We are committed to generate value for our portfolio companies and investors and continue to expect a minimum IRR of 25% p.a. at the Fund level for our investors.

of the business model, the quality of the products and the value it generates in the fast growing niche of Field Force Management. The initial customers of the company are amongst the largest corporate and institutions and the company is looking at the US market for expansion, where a significant pipeline has been built already.

Another company in our portfolio, Vinculum Solutions, featured as the cover story in the June 2014 edition of the CIO Review magazine. The company, which is a provider of Omni channel fulfilment software products and niche domain services, was credited for enabling the success of retailers globally by the magazine. The company has now entered the US market and has already exceeded their top line targets for the current quarter.

You can see that all our portfolio companies reflect our philosophy of investing in potential market leaders in niche spaces. We currently are in the process of analysing a strong pipeline of deals worth over INR 150 crore and we are very excited about these opportunities and believe that we can add huge value to some of these entities. Our dedicated mentor program still remains at the core of our investing and value creation philosophy and is one of our key strengths. Our portfolio companies have also benefited extensively through this program and our mentors have worked in unison with the promoters along their growth path. I would like to welcome the two distinguished leaders who have recently joined our mentor pool. Mr. Ujjwal Sinha is an alumnus of IIT Delhi and MIT, with vast experience in companies like Mckinsey, Microsoft, Salesforce.com and Digitas. Mr. MG Vasan is a businessman, scientist and philanthropist, and has vast experience in the higher scientific and educational circles.

VIKRAM GUPTAFounder & Managing Partner

ASHISH WADHWANIManaging Part-nerNORBERT FERNANDESCo-Founder & Principal

VISHAL GOURICo-founder & Mentor

PRAYAG MOHANTY

Associate

SONIA SHARMA

Vice President

SHIRISH POTNISCo-founder, IvyCamp

NEHA JAISWAL

Exec Assistant

GK PILLAIChairman

TEAMI am also pleased to share

with you the progress that has been made already on IvyCamp. Anju Gupta has recently joined the team; she has over 15 years’ experience in the Product Management

AAKANKSHA SHARMAAssociate

ANJU GUPTACo-founder, IvyCamp

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PORT

FOLIO

RML1portfolio

ABOUT THE COMPANY

With a goal to create positive social impact, Reuters Market Light is a first

of its kind mobile phone based service which provides personalised professional information to the farming community. It provides expert information to farmers at every stage of their crop cycle, right from pre-sowing to selling of the crop, thus enabling them to take informed decisions. The range of services include crop prices from markets of choice, local and international agricultural information that impacts prices, local weather forecasts and advisory tips to improve productivity. This information is further customised according to native languages (9 languages available currently), crops, markets, locations, stages in the crop cycle and frequency of updates, through SMS across all handsets and telecom operators.

The need for such a service was felt by the entrepreneur, Amit Mehra, post some extensive market research in the country and interactions with the farmer community. He realised that a farmer in India is estimated to get only 20-25 per cent price of his final produce vis-a-vis 40-50 per cent in the developed world. Additionally, the productivity of many Indian crops is amongst the lowest globally. One of the key reasons is lack

of relevant, timely, reliable and accurate information. Therefore, a service of this nature could prove revolutionary and generate a lot of value. However, the biggest challenge at that stage was to develop the market by educating the target segment about the existence of this service which could be a one-stop shop for all their information needs and which will bridge the information barriers and help them realise better prices for their produce. After a year since IvyCap partnered with RML, the company has over 1.3 million registered farmers across 50,000 villages in 17 states and covers over 450 crops and varieties, 1300 markets across these states and 3,500 weather locations. RML continues to receive support from a number of government and associated institutions. Amongst the key focus areas of the new government is the revival of agriculture, which Mr. Modi has been credited for achieving in his home state. With a greater thrust on developing agriculture as an industry and reducing inefficiencies in the sector, RML is the ideal partner for the government bodies and should continue to receive their support.

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and provide the ability to participate significantly in the supply chain. This would lead to sustainable growth in farmers’ incomes and improve their quality of life. Till now, RML has the largest aggregation of FPO’s (farmer producer organisations) that have been signed up for Krishidoot. It is gaining traction with participants, with over INR 20 crore worth of transactions completed already, with a much higher target for FY15.

Amit Mehra to Entrepreneur India.com, when asked about the strategy for next five years—“Beyond just providing decision-critical information to improve crop productivity and price realisation, RML is working on solving market linkage problems faced by farmers. We are thus collaborating with other organisations in the private and public sectors that engage and connect with the farming community of India. We will continue to expand and deepen RMLs vast reach and unmatched data assets combined with its content and technology expertise, to power a robust suite of offerings for private enterprise

and government projects”

During Q4FY14, the company’s retail revenue went up by 3X year-on-year, which was very close to the target. Due to extensive cost rationalizing measures, the costs which were up by 9% year-on-year were still lower than the budgeted number by 6%. Significant investment has been made in technology, product and Krishidoot platform.

On a broad industry level, RML faces some threat from KCC and other competitors who are looking to enter this space. However, the evolving retail subscription model moving towards lower prices and multi-channel focus should further strengthen the core positioning of RML. The company is looking to diversify its products and services, increasing the channel partners and contributing resources to drive subscription r e n e w a l s . In order to increase the en t e rp r i s e r e v e n u e , E M S engagement tools are b e i n g developed in consultation with key clients.

T h e p l a t f o r m b u s i n e s s ‘Krishidoot ’ is expected to be at the core of future growth and value generation. It is an easy-to-use, universal ICT based platform that connects farming communities with agri-businesses creating direct market linkages with buyers, and thus reducing intermediary influence in the supply chain. The purpose is to give the farmer-producer the advantage of scale in the market

PERFORMANCE UPDATE AND FUTURE PLANS

Extensive studies by independent international bodies acknowledge and validate the contribution made by RML.

• 12% reduction in price dispersion across markets due to availability of RML service—London Business School, 2013

• 90% of farmers believed they benefited from RML service, over 80% willing to pay for the same—Deutsche Gesellschaft for International Zusammenarbeit (GIZ) Study , 2011

• 8% increase in price realization for RML subscribers who sold directly to traders - World Bank Report, 2011

• 80% of farmers changed information sourcing behaviour after using RML—United States Agency for International Development (USAID) & ACDI/VOCA, 2011

• 5-25% increase in income of RML Subscribers interviewed—ICRIER Study, 2009.

Due to such visible contribution, leading to positive social change, RML has been recognised world over as an organisation looking to make a difference while running a profitable business

• Innovation for India Awards, Marico Innovation Foundation, 2014

• NABARD Rural Innovation Award, agriculture and allied activities, 2014

• The World Business and Development Award, 2010, conferred by the United Nations Development Programme, the International Chamber of Commerce and the International Business Leaders Forum Pic : Cover Story, India Today, June 2014

RECOGNITION

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AUJAS2portfolio

ABOUT THE COMPANY

Vision: Helping Organizations Manage Risk and Enhance Information Value through

Innovation and Excellence

Mission : To create a differentiated and scalable global eco-system of people, processes and technology to help customers minimize and mitigate Information Risks

Founded in 2008, Aujas Networks is a global Information Risk Management (IRM) services company with a presence in United States, South Asia and the Middle East. It provides technology life-cycle services including strategy and design, control integration, sustenance and optimization services in the area of information risk. The name finds it roots in the Sanskrit language and stands for ‘The Strength and Energy of a Warrior’. The company works with the same zeal to ward off any IT related attacks on its Enterprise clients.

The service portfolio includes:• Risk Management Frameworks• Data Protection• Identity Management/

Privileged Identity Management• Secure Development/Secure

Release• Virtual Security Office etc.

The key value proposition is to offer domain focused IRM services, leveraging the industry expertise and decades of IRM experience of the core team of accomplished professionals. The domains served by Aujas include Banking, Insurance, Technology, Communications, Manufacturing & Retail, Government and Healthcare. Keeping in mind the new technological advancements, the company now offers cloud security, mobile security, and open source security amongst others. Currently, the company partners with over 300 clients with its team of more than 160 professionals and has executed over 500 projects in 230 countries across 5 continents.

The company received seed funding from IDG Ventures and raised Series B Funding in November last year from IvyCap Ventures and Rajasthan Venture Capital Fund (RVCF)

Aujas continues to be the fastest growing company in India in the information risk management and security services domain, for the third year in a row. It was rated 26th on the Deloitte Technology Fast 50 India 2013 and 1st in IRM, based on percentage revenue growth over three years, which was 192% for Aujas.

In October 2013, Amazon Web Services established strategic partnership with Aujas as an APN Consulting Partner, a designation exclusive to companies that demonstrate expertise and commitment in developing advanced cloud solutions.

RECOGNITION

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FIELDEZ3portfolio

ABOUT THE COMPANY

Founded in 2011 and based out of Bangalore, FieldEZ is an on-demand mobile based solutions

company. It offers a range of solutions with features like call management and scheduling, lead management, time &

Despite strong competition in the space, the company has done fairly well in achieving its targeted performance. The revenue achieved in FY14 was around 70% of the target, with FY15 YTD number tracking in the similar range. Efficient management has led to cost control, with the FY15 YTD costs tracking lower than the budgeted amount by ~5%. Resources have been allocated to the planned investments happening in the international markets, primarily the ME and US. Aujas is ramping up its sales team in these regions to build pipeline and closing deals there; Impressive progress has been made already in closing deals in ME. On a macro level, IRM will always remain an evergreen sector, and will increasingly become a competitive advantage rather than a drag on the bottom line.

PERFORMANCE UPDATE AND FUTURE PLANS

The focus of the new central government is to empower businesses via technology. PM Modi, Confederation of All India Traders (CAIT) national convention, February 2014 – “Traders should use technology to make it big. Small businessmen can do big business by setting up virtual units, and then, take a leap forward. They can improve the delivery systems, and go for online marketing. They can set up virtual malls” Such a trend can be seen across the world and technology up gradation is receiving a push. Higher technology orientation will generate new IRM needs and new potential clients.

Rapid advancement in technology will keep presenting repeat business from the existing clients. Therefore, despite more competition expected in this space, especially from cloud based offerings, Aujas is on a strong foot due to its stand-out domain specific technology built by accomplished professionals and the ever growing market. Also, the company is actively looking to diversify across geographies and clients to mitigate the competitive threat.

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location reporting and travel & expense capture. They help in monitoring field executive performance, efficiently schedule and dispatch work force, track valuable customer information and respond quickly to the changing customer requirements. Also, it empowers field personnel to make prompt decisions by providing access to data.

It is currently being used in the following industries:• After sales services—service ticket management, scheduling and dispatch, order management, process compliance, electronic confirmation of service

• In-home care—plans customised and updated according to unique needs of all patients, an easy non-asset heavy installation and care staff management

• Oil and gas – right from the upstream services like searching and drilling to transportation to downstream services including refining and distribution

• Supports any device, platform and network. Works on iOS, Android, Windows or Java• Cloud based – no special hardware required. Zero investment, zero effort to get started. A highly secure and scalable system that readily integrates with the client’s existing ERP and CRM system• Works in an online (2G or 3G) or offline mode eliminating the need for live data connectivity.

“ FieldEZ aims to be a global leader in serving the needs of an increasingly mobile workforce which is expected to be 1.5 billion globally by 2015” - Balasubramanyam Mohan, Founder & CEO, after receiving the Frost and Sullivan recognition

• ‘Exemplar’ product company in NASSCOM Top 10 – April 2014

• Amongst NASSCOM top 7 Apps- 2014

• Winner of Product Innovation Leadership Award at Frost & Sullivan India ICT Awards – 2014

• Amongst 15 most promising start-ups in India– Proto.in, Sequoia Capital and BSE SME Exchange, 2011

In Q4 FY14, the company achieved revenues which were almost double the targeted amount. The costs are increasingly being rationalised as well. The total number of users have grown to 23,000. Further expansion is being driven by entry into new markets, primarily the US, by targeting select verticals in which the company has a stronghold. It has recently employed digital marketing for reaching out to SMEs and smaller clients and this campaign has helped in building a strong pipeline, both in the domestic market and outside.

At a macro level, there is emerging competition from new entrants and FieldEZ is looking to create partnerships for faster implementation. But this market in itself is very promising. Also, the Indian software product sector

is currently going through a boom. While NASSCOM has formulated a products council with the vision of growing the software products market to $10bn by 2020, the Indian Software Products Industry Roundtable (iSPIRT) claims that the same amount could go up to $25bn by 2025, with resolute and purposeful action by industry and government. Another interesting trend is over 50% of software product companies are completely self-funded and these younger, smaller companies are driving the growth in this space. The domestic market for software products is expected to grow at 14% (iSPIRT), almost three times the global growth rate, and a good part will come from the SME sector, which is amongst the focus areas for FieldEZ.

RECOGNITION

PERFORMANCE UPDATE AND FUTURE PLANS

FIELDEZ ADVANTAGE

Fieldez aims to be a global leader in serving the needs of an increasingly mobile workforce which is expected to be 1.5 Billion globally by 2015

- Balasubramanyam Mohan

CEO FieldEZ

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VINCULUM4portfolio

ABOUT THE COMPANY

Founded in 2007, Vinculum solutions provides IT software products and services. It offers

multi-channel fulfilment software products and niche domain services for e-commerce and brick and mortar retailers. The key products include:

• VineRetail: Covers order management, fulfilment, reverse logistics, replenishment, supplier portal and operational analytics for both e-commerce retailers and the brick and mortar ones. Offered both on a SaaS on a monthly subscription model or on a license model. Aim is to reach 1000+ customers in the next three years

• Vin MDM: A rule based engine for Master Data Management, which predicts, anticipates and cleanses data inconsistencies in Suppliers and Customers data masters

• Vin Stores: Store solutions covering work force scheduling and analytics, queue busting solutions, stock take, price checker etc.

They also offer domain focused consulting, product implementation services across functional areas

like merchandising operations, stores operations, warehousing and transportation solutions, merchandise planning, space and floor optimization, price optimization etc.

Some of the key clients include Future Supply Chains, A.S. Watson, Vestige, Collectabillia.com, and Happily Unmarried.

The company has been recognised for its performance at multiple platforms:

• NASSCOM ‘Emerge 50 growth category’, 2013: awarded to highly innovative start-ups foraying into untapped territories

• Featured as one of the 10 most promising retail software and solution providers by CIO Review 2013.

“We are looking to move into new markets. US is our immediate priority,” Venkat Nott, the CEO & Founder

The company has displayed robust performance and has sound financial health. The company achieved a top line of $7.2mm in FY14. The YTD Q1FY15 revenue exceeds the targeted number. Also, the costs are lower and EBITDA is better than the budgeted numbers, which is a sign of effective operational performance.

Going forward, the key priorities for the company include market entry in North & Latin America and digital marketing to the SME segment. The company is also looking to grow its products business in e-commerce and multi-channel retail. Investments have begun in the US market and the sales team has been established there, with a significant pipeline built already. The company is facing competition from front-end players in Asia and is looking to create partnerships for faster implementations. Apart from IvyCap Ventures, the company received another round of funding from its original investors, Accel Partners early this year.

RECOGNITION

PERFORMANCE UPDATE AND FUTURE PLANS

CIO Review Magazine, June 2014

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IvyScope Staff

The new government brings with it new hope and a fresh approach for business and investments. What does the industry and Ivycap Ventures have to say about the perceived shifts?

GOVERNMENT,VC INDUSTRY

COMING OF THE NEW

IMPACTON

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VC INDUSTRY

The remarkable electoral win of Narendra Modi in the National elections doesn’t just promise

good days for the people but for the venture capital and private equity industry as well. They have faced difficult circumstances for the past two years, but expect improvement because of the government’s pro investment, pro business policies.

Mr. Modi’s track record in Gujarat points towards the government’s interest and promotion of the domestic and foreign investment flows into vital sectors including infrastructure, power, and manufacturing, which have the probability to strengthen long-term development and wealth creation in India. Another factor that increases confidence is the expected de-clogging of the exit pipelines. The revival of the IPO market and the strengthening of the local currency make it easier to sell and repatriate funds.

are extremely confident in the Modi-government and expect to see a replication of his Gujarat model across the country, investors with deals over $100 million (INR 600 crore), are expected to wait and watch the first steps of the government closely before taking a call. Similarly, the foreign investors will be closely monitoring the policies and initiatives by the new government. These investors will look for tangible evidence for improvement and will want to know the direction of reforms.

A significant aspect of Modi’s governance style is that he does not interfere in the day to day decision making process. He believes in giving clear objectives to the bureaucrats and lets them execute. All his ministers have been given the mandate to bring reforms and ensure speedy execution. So the focus on execution is going to be positive across all sectors.

““I feel that if this government with absolute majority can’t improve the scenario, then no other government can.

“ Venture capitalists in India are expecting foreign capital inflows to increase in 6-18 months with the likelihood of a bounce back in the Initial Public Offering markets - ECONOMIC TIMES, MAY 2014

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Overseas investors are confident of the Narendra Modi - led government, due to which the foreign investment inflows are estimated to double to $60 billion this fiscal year, as opposed to $29 billion in 2013-14. This is expected to unleash reforms to reboot the economy, says an Assocham study. Venture capitalists in India are expecting foreign capital inflows to increase in 6-18 months with the likelihood of a bounce back in the Initial Public Offering markets. The unfolding scenario also points to easing of prices and lowering of interest rates, the two major challenges that the Indian economy had been facing for some years now. BJP and overall NDA’s emphatic majority with 62% seats indicates a growing confidence in such decision making. A strong centre is extremely promising for the foreign investors as they are looking for stability and certainty.

While small scale entrepreneurs

- Nishith Desai

Nishith Desai Associates

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Entrepreneurs are hopeful that such a result-oriented and pro-execution mindset will percolate to the lowest levels and will ease the regulatory hassles that these businesses have to endure currently. “Unfortunately, the system currently is not so business friendly. Whether you want to start a company, raise money or go to the market, there are a lot of procedural and other hiccups. The law is ambiguous and penalties/prosecution is increasing. However, currently there is fresh air of hope. Archaic laws and procedures should be eliminated. Policy drafting must be clear enough, so that people can act on it”, says Nishith Desai, Founder of Nishith Desai Associates. The sentiment is seconded by Hari Balasubramanian, Founder and CMD, Ontrack Systems. He says, “Our PM has demonstrated that he means business. If the government does not come in the way of the Private Sector, entrepreneurs will make a significant contribution in achieving the dreams of the Modi Government. If the current government curbs corruption, a lot of feel good factor will get created leading to more investment from local and foreign companies.”

Mr. G.K. Pillai, the former Union Home Secretary, is hopeful that the new government will improve the ease of doing business in India. He says, “In the current scenario, we are ranked 134th out of 189 countries in the world and hopefully in the next one year, the new government can bring it down to 50. I don’t think it is very difficult to get there.

Enforcement Directorate is a prime example, as per some fund managers. But they are hopeful for a change now. The government has been working greatly towards the increase in the Venture Capital funding, seeking to create a favorable climate for entrepreneurs. For the first time in the country’s history, Modi has inducted a minister for entrepreneurship—Sarbananda Sonowal. While the expectations are high, Sonawal has garnered a positive response from the masses. There are ways to improve the ecosystem and investors and experts from the industry are willing to come forward with ideas. Some key ideas suggested are as follows:• A key part is getting the private investment cycle restarted, which will have knock on effects in all parts of the economy. Continued focus also needs to be given to bringing government expenditure and the fiscal deficit down.• The government needs to make it easier and faster to set up a Category 1 Alternate Investment Fund (AIF) and reduce the minimum commitment required to set up one. Currently, social funds come under Category 1 AIFs that include venture capital funds, SME funds, infrastructure funds and other AIFs as prescribed.• It should also encourage banks to create debt instruments to help with working capital needs and make it easier for these ventures to sell to the government. Procurement policies are still inclined towards large businesses and government remains the biggest market for some of these entrepreneurs.• Another suggestion is to slash the taxation rate of 30% on angel investment. Such initiatives will enable thousands of entrepreneurs to set up and grow their businesses, propelling India’s economy.

Our PM has demonstrated that he means business. If the government does not come in the way of the Private Sector, entrepreneurs will make a significant contribution in achieving the dreams of the Modi Government.

“ “

One of the very first elementary steps is to learn to trust businesses. If anybody is lying or is making a false statement, he should be punished but otherwise, if he is saying that he is in compliance with the law, it should be accepted. Also, the govt. needs to take a look at the number of sectors which need FDI and the multiple projects which have been in the pipeline for a number of years, either because of environmental reasons or regulations, and the focus should be on clearing those and get the economy out of the policy logjam.” Precisely, the environment needs to be more business friendly and Mr. Modi is arguably the best bet for ensuring the same.

With the stock market showing positive signs from Modi’s victory, PE firms also see it as an opportunity to exit. The exit opportunities will increase through either an M&A or an IPO, a better visibility for such exits. There will be a reasonable amount of rupee stabilization against the US dollar. On the whole PE fund managers expect a revival of the financial system.However, despite the positivity and hope of a fresh approach, the situation is not bereft of problems. VCs are worried about the BJP’s resistance to FDI in multi-brand retail. The BJP has not taken a clear stand on the FDI in e-commerce. While they have promised to be investor-friendly, the industry is not really sure of what that means, with their opposition to FDI in multibrand retail. The hurdles that bureaucrats and judiciary have been putting in the way of entrepreneurs also make them feel discomforted. What is happening to Flipkart and its founders by the

- Hari Balasubramaniam

Founder & CMD, OnTrack Systems

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At IvyCap, the team is very excited with the recent developments and believes that the economy, the VC industry, the entrepreneurial ecosystem and IvyCap ventures, all stand to benefit immensely from these developments.

• In his first speech in Parliament, Mr. Modi said, “We should concentrate on agro-based industries. We need real time data on agri-products and increase in investment on agriculture”. Our portfolio company, RML, is a pioneer in this space and such a focus from the government will mean more support and better prospects for the company.

• The new government also has a pro-technology bent and wants to promote the use of technology for scaling up businesses. IvyCap has a very strong technological orientation as well and majority of our investments are in technology companies. Therefore, this is expected to lead to wider markets and faster growth-paths for our portfolio entities.

• This government has a broader focus on promoting entrepreneurship and recognizes the importance of these entrepreneurial ventures in the overall India growth story. In the Union Budget 2014-15, INR 10,000 crore has been allocated as a start-up fund for new businesses. National accelerators & incubators for start-ups are proposed to be set-up soon. Not only will this lead to more potential funding for VC funds, this also is a sign that the overall entrepreneurial system will flourish in the times to come, which has always been a larger objective of IvyCap.

““ The stock markets have reacted very positively to this development. Countries around the world are taking a positive view of India and FIIs are coming in larger numbers. So yes, we hope to see many positive changes soon.

The overall intent of the industry is towards de-clogging the decision and execution frameworks. They agree that things are changing for the better, but this needs proactive support. If the Modi government is able to take some reform-friendly measures along with taming inflation and earning goodwill of the people, the FDI will do a fast catch-up with the FIIs. The euphoria must be taken advantage of and things should move on from there.

Modi has been working out several strategies to increase and ensure Foreign Direct Investments. Keeping in mind the Vibrant Gujarat Summit, he has organized the Vibrant India Summit which is scheduled around the 4th to 6th of November. As per CII, “There is a lot of international interest and positivity around India; countries such as Japan have been making enquiries. Expectation levels are going up. Investors think India is a good investment destination again.” The Vibrant Gujarat Summit brought fresh investment into the economy of Gujarat and was also praised by several from the formal government and corporate sector of the nation. Ratan Tata and the Ambani brothers have been amongst the most notable India Inc leaders to have praised Modi in Vibrant Gujarat summits. With the Vibrant India Summit, Narendra Modi is confident of similar results. An official in the PMO said the November date is suitable since it coincides with WEF’s India show and, given Modi’s schedule, that’s the appropriate time.

It can be concluded that there is a strong positive vibe among the global investors since the change of government in Delhi. The Modi govt. seems committed to make the environment as favorable and constructive as possible. There is a forecast of clear skies for young entrepreneurs.

-Pradeep Gupta

Chairman & CMD, CyberMedia

• The foreign investor confidence in India, which had nearly eroded in the recent past, is in the process of being restored. The FIIs are already pouring in and the FDI is also expected to follow suit. IvyCap is soon going to focus on its second fund and this will create a perfect environment and timing for us to go to the market. A significant portion of the second fund is targeted to come from the international investors and this growing positive sentiment will be a big boost for us.

Overall, there is a hope for change and the new government has shown the intent to deliver on their promises. Pradeep Gupta, Chairman & CMD, CyberMedia says. “The stock market has reacted very positively to this development. Countries around the world are taking a positive view of India and FIIs are coming in larger numbers. So yes, we hope to see many positive changes soon.”

WHAT DOES THIS MEAN FOR IVYCAP

• Minister for Entrepreneurship, for the first time in India’s history

• Corpus of INR 10,000 crore for start-up funds in Union Budget 2014-15

• Vibrant India Summit, on the lines of Vibrant Gujarat Summit

• India Investment conference in US/London: Cabinet ministers will pitch India’s prospects to global institutional investors

• FIIs expected to double to $60bn this fiscal year

• Post one month of Modi govt., growth is looking up and inflation is cooling down

FACT OF THE MATTER

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VCINDUSTRYIN INDIA

IMPROVING THE ATTRACTIVENESS OF VENTURE CAPITAL INDUSTRY IN INDIA

The last few years have been a mixed bag for PE and VC funds in India. It all started

with the 2008 crises, though with a lag, and then some scams, a weak global recovery and a GAAR later, the jury is out on “investing in India”. PE and VC funds performance have been subject to the same level of cautious review.

Even though investment across Asia Pacific reduced by 22% in 2013, investment in PE (including VC industry) assets in India increased last year to USD$11.88bn by about 26%. Deal volumes were largely driven by small deals (below $20mm) and deal value was driven by a few large deals.

The general perception amongst fund managers is that while entrepreneurial activity and deal flow is strong, the valuations are aggressive for quality deals.

The jury is out on returns in PE and VC industry. KPMG reports that overall PE/VC returns in India on exits realised is at 29.1% p.a. This does not capture the fact that only $22bn of the $68bn invested in PE/VC funds since 2006 has been returned and therefore most of the funds have not exited their investments.

It is generally agreed, that the fund raising environment has been difficult. LPs (investors into VC/PE funds) have increased the scrutiny of the funds that they invest in and look for differentiation that would make the funds successful. A Bain Capital survey suggests that regulatory, economic environment as well as performance and exits are key concerns of the LPs.

A typical PE or VC fund is anywhere between 5 to 12 years in duration, hence judging industry performance on returns and exits with a few years data is probably neither fair nor accurate. To borrow a quote from an investment guru, which emphasise patience.

“Investing should be about watching paint dry or watching grass grow, If you want excitement, take $800 and go to Las Vegas” - Paul Samuelson

However what’s important, and what the industry must strive to address, is that sentiment for Indian PE and VC assets, at least prior to the NDA government taking over in Delhi, has been weak. In our interactions with investors, we have experienced the following key concerns:

1“India regulatory environment is very unfriendly and too complex”

2.“Are PE/VC funds making money?”

3.“PE and VC investments horizon is so long and investments are difficult to exit”

These are genuine concerns and at IvyCap we have strived to build our investing process and culture to address these questions. This is reflected in our investment philosophy and criteria, our mentor program, our ecosystem approach, and our strong governance agenda.

We feel that a lot more needs to be done to improve the performance of the industry in the long run. The industry players and the ecosystem must work together to achieve a better long term prospect of the industry in India.

So here is what can be done to

Ashish Wadwani Managing Partner, IvyCap Ventures

“ It is generally agreed, that the fund raising environment has been difficult. LPs have increased the scrutiny of the funds they invest in and look for differentiation that would make the funds successful.

“

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and will probably not meet typical lending norms of a bank. Success rate of SMEs and therefore of VC investments can improve dramatically with access to debt funding, which is not asset backed, to venture backed or SME companies.

• Better incubation, angel networks with access to “mentorship” talent and structured programs will also improve the survivability of the underlying companies and therefore returns to VC.

3. Exits, Exits, ExitsGiven that investments in this

asset class took-off in 2005, a 10 year horizon, and only $22bn of the $68bn in invested capital has been returned to investors, the next two years is critical for the success of many funds and also the industry at large.

From a VC perspective, Secondary sale and strategic sales are the most likely channels currently. While Buy-backs are determined by Promoters interest to retain control in their companies, this exit is not a viable structure to execute with first time entrepreneurs.

So here is how the exit environment be improved for venture backed companies.

• Partner with ‘Strategics’ in deals— With adequate protection, this gives VCs and promoters a channel of exit and also a potentially better growth trajectory.

• M&A activity between privately held SME companies would help them to strengthen their financial position and make them viable for acquisition or a listing.

• The development of the SME exchange and allowing retail financial savings and incentivising them to invest in listed companies on SME exchanges will increase the probability of IPOs for VC backed companies.

• Overseas listing of privately held

improve the VC industry.

1. Improving the VC EnvironmentMacro-economic, regulatory and

governance environment have been highlighted by investors as reasons which have hindered investors from investing in Venture capital and Private Equity. However there are several specific issues that can be addressed to improve the Venture environment in India.

• Regulations must reflect the fact the PE and VC investments are long term and can have disproportionate impact on industry competitiveness in the global context. There is a case for considering VC investment as “priority sector” rather than clubbing it with other fund management regulations.

• Incentivise long terms funds to invest in this asset class, particularly Pension funds. This will align return horizons of investors and the underlying asset class better.

• Allow VCs to invest in various instruments’ shares without them being subject to ECB guideline.

• Improve enforceability of various provisions of a typical VC term sheet provisions, because it is an integral part of managing risks and governance in fledgling companies.

• Allow mentors to be issued options similar to ESOPs. This will allow small companies to attract talent well beyond their ability to employ.

2. Improving Returns for VCs• Use Structuring as a risk

management and alignment tool and NOT as a substitute for evaluation. This is self explanatory. In the words of a seasoned investor, structuring deals with “guaranteed returns” or buy backs has resulted in some managers taking excessive risk on the businesses.

• Entry valuations that are too aggressive, risks the investors from not realising returns and risks the company from being unable to raise further rounds. To quote Warren Buffet—“try to be fearful when others are greedy”.

• Access to debt for small and medium enterprise is a major limitation of Venture backed companies. Such companies typically are Asset Light

“ While the industry needs to work hard to improve its attractiveness and long term prospects, at Ivycap we continue to be bullish about this asset class in India

“

companies in India, allows them to tap international equity markets for exits and gives a lot more access to capital to promoters, VCs, Investors.

• Mergers for Private companies could be made simpler

In summary, while the Industry needs to work hard to improve its attractiveness and long term prospects, at IvyCap we continue to be bullish about this Asset Class is India.

• Entrepreneurial activity in this country is very vibrant and has in fact taken off in the last 10 years with a new generation of professional and internationally experienced entrepreneurs also jumping into the mix

• Allocations to India PE is only about 1% of the total global PE allocation of nearly $350 bn—this allocation does not do justice to the opportunity levels and the quality of entrepreneurship

• VC industry leads the PE industry in terms of deals and returns and as the environment and industry practices mature, performance and returns will align with investor expectations.

• By Building the right ecosystem, a VC fund creates a long term differentiation in terms of access to deals, asset selection, investment management and exits which are long term differentiators and can build better returns for investors.

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IN CONVERSATION WITH BOARD of ADVISORSAT IVYCAP VENTURES IvyCap’s mentor and advisory panel is a convergence of a

wealth of knowledge, experience and expertise. Here is a conversation with three board of advisors at

IvyCap Ventures.

HARI BALASUBRAMANIANYou are now a veteran in the technology industry. But when you started out,

what was the inspiration behind launching Ontrack Systems?Started my career with a Public Sector Engineering giant after completing my engineering degree. At that time Personal Computers (PCs) had just started coming to the market. Was a great advocate of the power of personal computers and was advocating the need to put computing power in the hands of the end userinstead of depending on the EDP department. In the structure of the Public Sector in those times, decision making was a matter of position and seniority. Realised that it would take me at least 20 years to reach a position in the organisation where I would be empowered to take decisions which could make a significant positive impact and difference to the organisation.

An entrepreneur for over 25 years, Hari is the Founder Chairman and MD of OntrackSystems Ltd, an ICT company based in Kol-kata, India, employing 250 professionals in six countries. His popular portal www.calon-line.com (Calcutta Online) was acquired by a NASDAQ listed company in 1998-99. He is associated with various organizations like Comunet Info-Systems, TiE, COMPASS, NASSCOM and Shree Dibyananda Mission

That is when the passion to do something on my own was discovered. I quit my job. All I had was the passion and about Rs. 1800/- in my bank account those days. [I] Was a great advocate of personal

computers and was advocating the need to put computing power in the hands of the end user instead of depending on the EDP department

“ “

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HARI BALASUBRAMANIAN

Technology as a field is so dynamic and ever-changing in nature. What is the key to be successful in this industry?Success is something which has a shelf value. Success and failure are temporal in nature. The key to success in any field is the realisation that there is a universal truth which must be pursued by each person which is beyond the body and mind. What you call as dynamic and ever changing is the nature of the mind. Truth is still and ever present. When people / entrepreneurs realise this they can pursue success (as defined by most people) in any field, effortlessly since it then becomes a game which they enjoy playing.

How do you see the entrepreneurial ecosystem shaping up in the country? Do you think that the system here is supportive of entrepreneurs?The entrepreneurial eco system in the country is most fortunate to have millions of young minds. In recent times, we have seen the emergence of several support systems aiding entrepreneurs in several ways to make an impact in the global ecosystem. Am very confident that our country is building the foundation of several global corporations who will stand out and make an impact in the lives of billions of people in the most positive way and generate a new idea of wealth creation

What specific changes are needed to make the system more entrepreneur friendly?Freedom from the fear of failure, which is the responsibility of the society at large. Our conditioned thinking and pushing young minds to follow traditional paths that society approves is the biggest problem posed for the millions of young people in our country. Society must give our young people the freedom to tread the path they choose. Government, institutions, parents, teachers and every single person must facilitate the

youth in finding their true passion. We must also learn to not discourage those coming from humble backgrounds and treat them at par with others.

Was it your passion for entrepreneurship which led you to join India Angel Network?Have been very inspired by several Indian entrepreneurs from the USA and specially Silicon Valley, who have invested time in supporting young entrepreneurs as a way of giving back to society and to strengthen the eco system. In the tech space if you keep running without a break, you can at best remain in the same place. The realisation that young minds think differently and with a fresh perspective was one of the main reasons that I wanted to support young entrepreneurs. It is one of the best ways to keep educating yourselves. Start-up funding was extremely challenging in India till some time back. The need to work and learn from young entrepreneurs and the same time give back something to the ecosystem was the main motivation to start / join a Network. In the Indian Angel Network, I found a very appropriate set of members, who collectively had a shared vision, time, and money and domain expertise to make an impact in the Indian entrepreneurial ecosystem.

IvyCap Ventures is a fund primarily focused on technology sector investments. As a renowned expert in the field, how do you think that places the fund?IvyCap has a fantastic team of people from the best of institutions with a phenomenal track record. The vision and mission is truly altruistic and Vikram and the team have made a significant impact in the ecosystem. IvyCap is now known by most young entrepreneurs who I meet. It is well equipped both from the deal sourcing side as well as in supporting the investee companies with the combined play of the Mentor Network, Board and the institutional investors. Exit and planning for exits is one the most important activity and the team

is already putting together a plan for possible scenarios which is very commendable.

Going forward, what are your ex-pectations from IvyCap Ventures?To invest and support creation of at least two “One Billion Dollar” companies from India in the next 7 years.

What are your views on IvyCamp, the business plan and case study challenge that the fund is in the process of launching?It is a very good initiative and will come as a shot in the arm for the students and departments of institutions. It should be able to fill some of the gaps that we see in the institutions as on date and the initiative should be very proactive such that entrepreneurs in the making get the right type of support and push required for their career planning.

Apart from your own firm, you have been associated with multiple entities like TiE, COMPASS, NASSCOM, India Angel Network and IvyCap Ventures. Which according to you has been the most complex and challenging experience?Each one has its own set of complexity, challenges and joy. The common constituent in all these organisations, is people. Net of net , the most complex situations are created by people and their ego’s and the situation is resolved by people who understand people and have very little or no ego.

You have been an entrepreneur all your life. What according to you are the key attributes that a successful entrepreneur should possess?Fearless passion and a drive to achieve something significant which is beyond an individual.

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PRADEEP GUPTA

A lot of people want to hear more about the scope and horizon of the IIT Alumni

Trust. Could you please share some details on the same?There are essentially two purposes of the trust. One has already been done by putting in the IIT alumni’s money in IvyCap. The second purpose now is to manage the upside and returns, as and when they start coming in. A certain percent of the upside of the fund managers will come to the trust which will, in return, be deployed in the educational institutions. It is in line with our policy of giving back to the alma mater.

You are now a veteran in the technology industry. But when you started out, what was the inspiration behind launching Cyber Media?I worked in IT for a while and realized that very little information was available about it at the time. I also felt that it will grow in leaps and bounds in the coming times. Then, on one chance meeting with friends, someone suggested that she wanted to pursue a

venture. Another guy, from a printing background, offered to pitch in for the same. I did some quick math and suggested that the best field to go in would be computers. The others also joined in. That is how the idea of CyberMedia took shape.

Technology as a field is so dynamic and ever-changing in nature. What is the key to be successful in this industry?The key here is to stay ahead of the curve. You have to keep looking around and innovate continuously. Also, another important thing is to react fast. You can’t keep sitting on your observations and findings in this industry.

Cyber media is a market leader in most of its segments. What according to you has contributed to the success that you and your firm has achieved over the years?There are five values that we believe

in which have acted as ladders to our success. First is innovation, to always have the zeal to create something new. Second is our belief in maintaining high standards of integrity. Third is influence since we are a media company and our work should be able to influence communities. Fourth is excellence and we aim very high in this regard. Fifth is internal meritocracy or caring meritocracy.

The key here is to stay ahead of the curve. You have to keep looking around and innovate continuously. Also, another important thing is to react fast.

“ “Pradeep Gupta is the Chairman of the CyberMedia Group, South Asia’s first and largest specialty media house, with 15 publications, 12 websites, over 150 events and weekly TV programs in the infotech, telecom, consumer electronics & biotech areas. Pradeep is also an Angel investor and a mentor to a number of entrepreneurs. He is on the TiE Board of Trustees and co-founder, Indian Angel Network. He is also associ-ated with organizations like UTI Asset Management Company, Newspaper Society and Kaleidoscope Entertainment.

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How do you see the entrepreneurial ecosystem shaping up in the country? Do you think that the system here is supportive of entrepreneurs?I think much has changed in the country from my time. At my time, the general norm was that you do not become an entrepreneur. Everything from the system to the families would be against you. Now, a number of organisations have come in and changed the scenario. There is TiE, angel networks, VCs, PEs, mentors, incubators and what not. Another most significant change has happened in the mind-set. Now, people from even middle class families are open to going the entrepreneurial way, which in my opinion is quite historic. Earlier this option used to be way down their list. So yes, I think this is a great time to be an entrepreneur in the country today.

Was it your passion for entrepreneurship which led to the foundation of India Angel Network?Yes. Prior to India Angel, we had an organisation called the Infinity Venture Fund. 15 of us had put in money in that and the model was such that each person would mentor these investee companies as well. We were all very enthusiastic about it and ended up making good returns for the fund. But we realised that the structure of the fund restricted us from making investments at different times, which was needed to truly support the entrepreneurs. So we figured out a different model and set up India Angel Network, wherein we are not restricted by clauses and time periods to make these investments.

IvyCap Ventures is a fund primarily focused on technology sector investments. As a renowned expert in the field, how do you think that places the fund?Though there are a number of funds which are technology oriented, I feel IvyCap has a major differentiating

factor which is the IIT network. Through its unique benefits like access to the mentor pool, Give Back program, access to deal flows and wide outreach to the institutes, I think that gives a distinctive advantage to the fund.One of the key differentiating factors for IvyCap is that the IIT Alumni Trust is the anchor advisor. In what ways do you think that helps the fund?IITians are a very successful lot around the world in both the technical and managerial fields. They have been very successful entrepreneurs as well. IvyCap has been able to leverage this pool in multiple ways through the mentor network and the overall IITAlumni network. Such connections have granted the firm a distinct edge in the market. Also, due to more recognisability in the alum network, the firm has been able to get a lot of deals routed through them.

Going forward, what are your expectations from IvyCap Ventures? Deploy the funds in the best possible way. Ensure solid strong growth for the investee companies. Generate extensive value for all the stakeholders. Earn returns as per the targets set to benefit the investors and enable us to plough back the same in the educational institutions.

What are your views on IvyCamp, the business plan and case study challenge that the fund is in the process of launching?I think the idea is pretty great. It will improve the engagement with the campuses and the alumni networks. It will bring IvyCap into limelight; more and more people will become aware of it. At the same time, it will be such a boost to the budding entrepreneurs. I think it will prove to be a great marketing and branding exercise for IvyCap.With the new government in place, how do you think that would

impact the overall economy and investment climate in the country?The new government has assured a lot of confidence. They have come in with a solid mandate behind themwhich leads to the belief that they can deliver. We really hope that this confidence translates into more investments. Already the effects of the same are visible. The stock markets have reacted very positively to this development. Countries around the world are taking a positive view of India and FIIs are coming in larger numbers. So yes, we hope to see manypositive changes soon.

You have been an entrepreneur all your life. What according to you are the key attributes that a successful entrepreneur should possess?One should be able to have a very strong inspiration because that is always the first step. One should also have the aspiration to reach great heights someday. The third thing is perspiration since a lot of hard work needs to be put in. Then, the last thing is leadership abilities because the person should be able to scale it up, have teams, delegate responsibilities etc.

Through its unique benefits like access to the mentor pool, Give Back program, access to deal flows and wide outreach to the institutes, I think that gives a distinctive advantage to the fund.

“

“

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NISHITH DESAIBack in 1989, your firm

must have been one of the pioneers in its own field.

What motivated you to start your own firm?I am someone who you would call a constructive contrarian. I like to challenge status quo. I have a constant urge to do new things and enjoy changing the world- for the better. Back in 1984-85, while I was still a solo practitioner, a cousin suggested to me that I should to set up a law firm. However, I didn’t want to set up yet another law firm that provided the same services as many others. I was keen to set up something ‘distinctly different’. So, for the next four years, I studied over hundred professional firms—accounting/consulting/law and others. After which, I developed a new law firm model in 1990-Nishith Desai associates (NDA). It was based on research, academic, thought leadership and innovations, not just billable hours.

Our firm model has now become a case study in the professional services industry. Recently, Financial Times (London) has just conferred upon us as ‘The Most Innovative Indian

Law Firm’. Interestingly, the FT also ranked us as number 2nd under ‘The Most Innovative Law Firm ‘in Asia Pacific including Australia (APAC-A). FT further commented, “Nishith Desai created a model and approach radically different from that of most international premium law firms. The model was ahead of its time”. We now rank high both on profitability as well as quality in our ratings. The passion to be able to create this difference is what drove me to establish a new institution. I am very excited of our achievements.

Apart from legal advice, your firm is quite active in research articles and publications. Please tell us more about the idea behind that.Traditional law firms begin their research when a client comes to them with specific issues. It comes at the cost of client billable time. Instead, we invest huge time (sometimes as high as 35% of our total time), money and resource into research and innovation. We believe that every new technology, every new financial instrument and every new business model brings along with it a new legal or tax issue.

Look at topics like ecommerce, Wi-Fi, WiMAX, cloud computing, data analytics, stem cell, surrogacy etc. Think of how many legal and tax issues have arisen since? Remember “Right to forget”? A new legal right introduced by Google. We follow the NDA way – ‘anticipate, prepare and deliver’. Anticipate the future, prepare today and deliver when the time comes- at the speed of thought. During an Anticipation phase, we do trend assessment and forecasting of new technologies and new businesses. In preparatory phase, we shortlist some trends and delve deeper into them. We conduct extensive secondary and even primary studies. We are now ready to deliver high quality, insightful advice at the speed of thought to our clients. For instance, we now have a dedicated practice group ready to advice on legal and tax issues in Bitcoins. We believe Bitcoins could be and will be a hugely disruptive technology within the banking sector and benefit the poorest section, as it would almost eliminate transaction costs. Most of our research conducted (on firm expense) and published is in the public

Nishith Desai is the founder of the multi-skilled, research-based law firm, Ni-shithDesai Associates (“NDA”), which has offices in Mumbai, Silicon Valley, Banga-lore and Singapore. He is an international tax and corporate lawyer, researcher, author and lecturer. In November 2004, Nishith Desai was ranked as No. 28 in a global Top 50 “Gold List” by Tax Business, a UK-based journal for the international tax community, after a worldwide survey of tax professionals who had influenced tax policies. He also holds a special license from the State Bar of California to practice Indian law

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at any stage. Fourthly, archaic laws and procedures should be eliminated. And finally, we need to move from Democracy to Netocracy. By using technology we can develop a system of real time legislation, amendment to laws and repeal thereof when they are no longer needed or have turned obsolete.

You would have been a part of multiple transactions and structuring exercises of different funds. Which fields/sectors do you think have been the biggest beneficiaries of VC investment?The biggest beneficiary is definitely the technology space, which includes bio-technology as well. Also, though technology has grown in India it has not reached levels where it could potentially be. I also feel that particularly in India, there is a huge untapped opportunity for social entrepreneurship. The scalability is the biggest advantage for us, owing to the size of the market available. India could be a social lab just as Silicon Valley has been for technology.

What is your reading of the role of Venture Capitalists in today’s investment landscape?Firstly, they should be able to smell an idea and bet on it. They should have the sense to judge what can become big and have the risk appetite to put their money where their mouth is. Also, the idea itself is not enough. A good idea is only 1/3rd the battle won, the key lies in the execution. So the second thing they need to do is to help the entrepreneurs execute the idea. The last thing that they should do is to monitor the governance of the portfolio companies, because much of the value lies in the management. To my mind, these are the roles that the venture capitalists can play.

domain and free of cost. Sometimes people refer to us as an ‘Open Source firm’. We have realized that by sharing, we are learning more.

In your view, how business friendly is the current law environment and tax policies in India? How does that compare to other countries, say the US?Unfortunately, the system currently is not so business friendly. Whether you want to start a company, raise money or go to the market, there are a lot of procedural and other hiccups. The law is ambiguous and penalties/prosecution are increasing. The US law is complicated but clearer and penalties are proportionate to the crime committed. The manner and way in which laws are drafted in our country, is extremely poor. For the most part, people end up taking a judgement call as to what is legal without consulting a lawyer. Consequently, when and if they are legally non-compliant, the penalties imposed and prosecution served is severe. The biggest proof of this unfortunate situation is that India now ranks number one on the tax misery index, a position arguably held by France earlier. With the retrospective and extra-territorial taxes, the situation only became worst. Businesses may shy away from here. However, currently there is fresh air of hope.

What are the key changes that should be brought in the system to make them more business friendly?Firstly, from a lawyers’ perspective, we must convey a message that we welcome investment in every sector and invite foreign investment. We need to create trust between the government and those that are governed. That could be done by framing policies that are business friendly and demonstrate a degree of trust in people. Policy drafting must be clear enough, so that people can act on it. Secondly, we need to thoroughly revamp the judiciary. Thirdly, we need to strictly check bureaucratic discretion in every legislation to check for corruption

The manner and way in which laws are drafted in our country is extremely poor. For the most part, people end up taking a judgement call as to what is legal without consulting a lawyer.

“ “

What is your view of the investments made by the fund so far?I think the fund has invested in very interesting ventures. I am excited to be on the advisory board of this company. I really enjoy what I have been doing here and it has been good fun to work with the team at IvyCap. I have hardly taken any other advisory role of this nature but I fundamentally like the model of IvyCap. I like their desire to make profits but with a purpose to give back. In the process, I have also learned about new ideas/businesses and have enjoyed that. I would want to mentor the entrepreneurs, share my experience and nurture them. To me it’s the joy of seeing the baby growing up to be a useful member of society.

What are your expectations from the fund, going forward?I think the primary goal is to create value for the investors and the portfolio companies. The success of portfolio companies is important not just from a returns perspective but it also fulfils the key purpose of nurturing the entrepreneurial ecosystem and budding minds.

What are some of the key attributes which entrepreneurs need to possess in order to launch and run successful ventures?The entrepreneurs need to be passionate. The initial passion is not to make money but the desire to do something different, and in the process make money. They need to have an out of the box thinking. They should build persistence and develop an ability to be able to go through highs and lows. They should have the courage to withstand crisis. When we started out, most of the trends which we predicted did not materialise. However, with time and experience, over 80% of our forecasts come true. Lastly, they should realise that to fail is not a crime but to fail dishonestly is a crime. Stay true to what you are doing.

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With the new government in place, how do you think that would impact the overall economy and investment climate in the country?We are very bullish on the new government right now and so far, they have delivered. I am confident that there will be a positive spillover effect on the economy. However, they need to be careful that some elements should not derail this redevelopment process. The government so far has shown the will, even by taking some unpopular but important decisions. I feel that if this government with absolute majority can’t improve the scenario, no other government can. Another important measure taken by them is the effort to improve the political stability in the region, by reaching out to neighbouring countries. Maintaining law and order should be amongst their top priority.

What would be the impact on the venture capital industry in general and IvyCap in particular?I am confident that the VC industry is going to see an upsurge. There are some tax problems related to the pass through status but that would most likely be resolved in the coming budget. Hopefully, the regulatory framework for investments will get more streamlined. Ivycap would then be able to make more impactful investments and nurture more ideas.

The government so far has shown the will, even by taking some unpopular decisions. I feel that if this government with absolute majority can’t improve the scenario, then no other government can.

“ “

YOUNGFRESHtalent,

approachAakanksha Sharma

Anchor investors, angel investors, traction, run-rate and draw down. Such terms

would have intimidated a twenty-something fresh graduate till a while back. No more! Now we see a new crop of young graduates from esteemed institutions like the IIMs and IITs entering the PE/VC business at the very start of their careers, despite the challenging and technical nature of this industry. While a very few make it, it’s worthwhile to note why this industry has become so attractive.

Following is a comparison of the parameters on which these youngsters evaluate different work areas and how does the PE/VC business fare on these parameters• Quality of work—If you draw a pyramid of finance profiles, then the investing business (PE/VC/hedge fund) sits at the top due to the nature and complexity of work involved. For people looking to derive satisfaction out of their work and looking to learn in leaps and bounds, this is the ideal way to start.

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• Quality of people—After the nature of work, the biggest drivers inone’s careers are the people that you work with. They inspire, teach, motivate, challenge and lead you and shape you into a better professional. In this space, not only does the fund team comprises highly experienced and distinguished professionals, but with the whole ecosystem of investors, mentors, advisors and entrepreneurs that one gets to deal with, there is no end to the opportunities to interact with

and work alongside these stalwarts.• Responsibility and accountability - A characteristic feature of this industry is smaller team sizes and as compared to other fields, one gets to move up the learning curve very quickly. The new hires soon start handling entire deals and managing workflow on their own. There is no passing the buck in this system, which again serves as a big plus for those looking to learn.

• Jack of all trades – There is no scope for monotony in this industry. Each investment is in a different sector, ranging from e-waste to technology to QSR to agribusiness to anything under the sun. Not only does one get to learn about distinct and diverse fields, it also helps in developing an objective approach to all situations irrespective of their nature.

• Future entrepreneurs – Sometimes, the youngsters hoping to set up their own ventures a few years down the line start their careers via this route to get a sense of how entrepreneurial ventures pan out. They get to learn about fresh ideas, some general do’s and don’ts, the right people to approach and a multitude of learnings from different business models, the best of which can be employed by them in their own ventures at a later stage.

• Networking opportunity – The investors, mentors, advisors are all highly successful and distinguished personalities in their respective fields. By working alongside them, one gets to develop useful connections which can be leveraged all through one’s career.

• A unique business model – In this industry, you literally do everything at the same time. Raising funds test your pitching and marketing skills, dealing with investors builds your people skills, entering/exiting investments test your technical skills and running those investments involve managerial skills. Therefore, it’s like a one stop shop for honing the entire range of corporate skills.

What lies in it for the funds?The funds are also looking to develop

this young talent because they have keen, sharp minds with more enthusiasm and will to deliver. They don’t come with a set of pre-conceived notions and are filled with fresh ideas and approach. It being their first job, they have more commitment and association with the organisation. Also, they can leverage the vast and thriving student network to generate leads and new opportunities. Though still at a nascent stage, this trend is surely beginning to build.

Having interned at a PE firm during my MBA, I realised that this was the field which could interest and challenge me at the same time. I was awe-struck by the level of knowledge that my superiors possessed and the ambition of reaching that level one day drove me to join this industry. A couple of my friends who got the opportunity to intern in this field had very similar thoughts about the industry-Aakanksha Sharma, Associate, IvyCap Ventures

“ “

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What interested you about IvyCamp when you decided to come on-

board?Couple of things. One, it was focused

to what IvyCap had been doing. I had been the CEO of IIT Bombay Alumni Association, I was involved in an innovation centre on the campus (IITB) and was also acting as a mentor to a few units and helping them to raise funds from Angels and VCs etc. So it was a “strategic fit” for me to take up this challenge. So early this year we decided to formalise the concept and start work on what is sure to become a very successful and a prominent competition in the years to come .

on engaging with the students and promoting and fostering entrepreneurship, which was something I was looking to do after moving back to India. Second, from my own experience, I have seen that how we source and utilise information is very different from how it is done in the US. So, I thought that there was a lot that I could add from my own experiences and give back to the whole system.

What is the USP of this competition? How is it different from the numerous other competitions held by other companies?One, I think there are rarely any competitions that have a focus on both engineering and management institutes. And if I compare that to the US, a lot of schools there have engineering and

management divisions under the same institute. When you float something there, you get an engineering and management experience together. But what we see here in India is very different. So by doing something like IvyCamp, we can get a collaborative perspective and experience. Also, though there are multiple competitions, I don’t know how many VC funds are there which actually run competitions like this. I think it makes a great sense for a VC fund to do it because we can lend our own expertise to it and make it a better experience for all stakeholders. And lastly, I think the personal experience that we are adding to it, by way of mentoring, is a very interesting aspect of the whole event. Also, the biggest incentive would be that we are actually looking to provide

IvyCap Ventures is founded on a well-recognised fact that the

success rate of enterprises founded by graduates from premier institutes of the country is far higher than the general industry levels. One of the objectives of IvyCap, therefore, has been to promote entrepreneurship in the students of these institutes. It is from this philosophy that the need to engage more with the

institute communities consisting of students, faculty, staff and alumni was felt.

Vikram and myself, we had been discussing for some time about how to bring about meaningful engagement with the Institutes when he came up with the idea of a business plan and case study competition. As you can see, this concept fits in very well with all that IvyCap stands for.

For about past 3-4 years, I have been involved in activities which one could say were sort of complementary

ANJU GUPTACO-FOUNDER, IVYCAMP

CO-FOUNDER, IVYCAMP

27

gives them ideas and maybe again help them from a recruitment perspective. Another key aspect for the companies will be the branding that this will create. The target audience is huge and consists of all the people (students/alumni) who will be the biggest decision makers and difference makers in the coming times. Also, these sponsors will realise that we have other sponsors, mentors, judges and a big finale which will be telecasted and will have many eminent business personalities as audience and potential investors, which will provide a lot of exposure and visibility in the circles that matter. Also, they will also be exposed to great ideas by the best minds in the country and may lead to a potential investment opportunity for them.

What is your vision for IvyCamp? How do you see this competition shape up say five years down the line?Eventually, we see this event scaling great heights. We want all stakeholders to become an integral part of the event. One, we want to create a unique branding for IvyCamp, not just as another regular business or a management case study event but as the place to be for people when they have unique, investable and potential revenue generating ideas. We have to consistently maintain and improve this level, year after year, for people to really value and anticipate this event. So much so that the sponsors should want to increasingly get associated with this event, for the kind of exposure and connections that this event can help generate. The mentors and judges should look forward to this every year when they get to interact with the young, sharp and enthusiastic minds. Lastly, if somebody else wants to launch an event of a similar nature, they should look at us and try to take a leaf out of our book. People should see us as the guys who have got it right.

Who is your target audience? Who all are you trying to reach?One is the students who have an idea in mind but don’t really know how to communicate it. Second is the experienced faculty of these institutions. Third are the alums who have been out of the campuses for a few years now and have a hang of the business environment and how the real world functions. That is on the participation front. But on the flip side, we will also involve mentors who can share their experiences and make it more stimulating for the participants.

It is very rare that a contest is open to the professors of such institutes. Any particular reason for that?The professors are very experienced in their respective fields and some of them also move from the corporate sector to the teaching line. Plus, they work as consultants for specific projects with a lot of companies these days. So they have a view on most things in the business world.

What kind of response do you anticipate from the students and alumni? Well, based on what we have experienced so far, both the students and the alums should be very interested. Especially in India now in the past couple of years, the entrepreneurship momentum is really building. We are now talking about social entrepreneurship and things that we didn’t even think of, a few years back. Also, these days the respective campuses are making a lot of effort to connect with their alumni base and this could be an avenue for the same. Also, since we are differentiating our self in a lot of ways, we are hoping that will stand out as opposed to other competitions which are focused on some limited aspects only.

How do you think IvyCamp will contribute to the larger entrepreneurial system in the country?A few different ways. One, by way of this competition, the best plans can actually get funding and will not remain

just ideas. Second, we are connecting the investors and investees here. So these entrepreneurs will know now who to reach out to. Also, from my own experience, I have seen that a lot of people have ideas but don’t really know how to express it. So we are aiming to help those people in shaping and developing these ideas. Hopefully we will get more and more people involved and with institutes working together, we will build a global community with global interactions and sharing of perspectives and resources to promote and foster entrepreneurship.

How do you see IvyCamp benefitting IvyCap Ventures?One, by building the brand for IvyCamp, we want to communicate that this is a very good and useful place to share great ideas. Not only in terms of getting investing for the plans but to also learn a lot through mentor interactions and guidance. So that should develop a good pipeline of investable ideas for IvyCap, via the IvyCamp route. Second, by making IvyCamp bigger and better, IvyCap will be seen as an organisation not just interested in investment but as somebody who is really engaged in fostering, growing and building entrepreneurs. That will help people look at IvyCap for the differentiated fund that it is. Going forward, we want people with fresh ideas to just think of IvyCap as the place to go to. And I think as a team also, IvyCap will have some great learnings as well through this entire experience.

How does this event stand to benefit the sponsors who would be contributing to this event?There are a couple of distinct ways in which the sponsors will benefit. One, for companies which do not have a strong relationship with the campuses and the alumni, this could be a great way to reach out to a number of these esteemed institutes, which would be useful for them from a recruiting and a placement perspective. If you look from a case study perspective, there will be some real life cases involved there, potential problems that companies are really facing. Having students prepare solutions for them again

CO-FOUNDER, IVYCAMP

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A first of its kind annual venture funding & case

study competitionAn IvyCap Ventures Initiative

For more info: www.ivycamp.in | For sponsorships contact Shirish Potnis : Shirish@ivycapventures.com | Anju Gupta : anju@ivycapventures.com

The competition is going to be launched in the next couple of months and will consist of campus entries/rounds, regional rounds and a mega final. The mega finals will be held at Mumbai and winners

selected by panel of judges drawn from venture capitalists, angel investors and successful entrepreneurs from the IIT - IIM ecosystem. IvyCap Ventures has tied up with a top media house for this grand event.

Select teams from IvyCamp will benefit from interaction with the vast pool of Mentors of IvyCap Ventures.IvyCap Ventures and its network of associates will provide funding to the top proposals in IvyCamp.

Special award for Best Women Entrepreneur across all verticals and categories!

Best On-campus

Start-upAward

Best Off-campus Enterprise

Award

31 Top InstitutesIITsIIMsISB

BITS

5 VerticalsSocial

HealthcareTech

Agri+ RuralOthers

20 experts confirmed

already as Judges for the Grand Fi-nale in Mumbai

Sponsored by

and others

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