Siblings Arihant and Amit Patni came into prominence after the family sold out IT firm Patni Computer Systems to Nasdaq-listed iGate Corp for $1.5 billion in a bulge-bracket deal in January 2011. Almost six months later, the siblings launched another venture Nirvana Venture Advisors, a VC fund focused on the internet space in India. They have now come up with another venture, called The Hive India, a Big Data-focused early stage fund which is looking to invest three-five companies per year.
In an interview with Techcircle.in, Hive India managing director Arihant talks about the new venture, plans and the Indian startup ecosystem. Here are edited excerpts:
What is The Hive India all about? How is it different from other funds in India?
Hive India is a seed fund looking to invest in early stage Big Data companies that have a global value proposition. It is targeting ventures operating in multi-channel marketing, CRM, security, IT management, e-commerce, retail, media, advertising, financial services and insurance, telecommunication and healthcare.
However, Hive India is not a typical VC fund. We invest our own money and are looking to put in between $200,000 and $2 million. We may also provide additional capital if the company needs it. In the initial years, we will invest in three-five companies per year. We have already identified a few ventures. We are investing in two-three companies in this calendar year alone. Our first investment will be announced very soon.
For early stage/ideation-stage companies, we will also provide infrastructure and mentorship, and will help them scale their products and gain some traction. However, incubation is not very important as there are already many incubators in India. We will also connect with them with large funds and our network of experts.
Eventually, we expect to convert Hive India to a large VC fund, with contributions from multiple partners.
What are the key factors that you will look for before investing in a company?
First of all, we will look at the team. Their prior experience in building a successful product is very important. The other important factors are product and market opportunities. The product should have a global value proposition.
As I said earlier, it is a kind of incubation-cum-seed fund. We are replicating the Hive Silicon Valley model in India. Hive India will help companies develop their products and scale them up.
Indian entrepreneurs often complain that Big Data sector in the country does not get much attention? Do you agree?
Good companies always get good capital. If you have built a successful product, people will come and invest in your company. Market opportunities are also important. We have some good companies, such as Mu Sigma, which have already scripted successful stories out of India. Mu Sigma also raised a big amount in funding (In 2011, it raised $108 million in an investment round led by General Atlantic).
Not many investors in India are exclusively focusing on Big Data space. What is your expectation from this market?
The Big Data industry is still young and evolving. Only a few companies have made their mark so far. However, we are seeing a lot of opportunities and looking to capitalise on the huge population here.
For example, if you think about the Aadhaar card, there will be millions of people generating terabytes of data. It is a huge opportunity. If you offer a good product, people will pay.
Moreover, Bay Area professionals are now coming back to India. We have already met people who have good ideas.
That said, we are not here for a quick turnaround or to make a quick exit. We are here for long-term collaboration with our portfolio companies. We are going to build a team in Bangalore and will also work with other incubators/experts to pick companies.
What do you think about the Big Data startup ecosystem in India?
In general, it is not just the Big Data but the entire startup ecosystem is not as much mature as in the US. In fact, Big Data is a good business to start. But you have to put some thoughts into how you will create valuable business around an idea. That is what I am looking for.
However, I think there is enough opportunity down the road. Billions terabytes of data are being generated every day. We have to make the most of it. There are millions of online companies, social media and ecommerce firms, besides banking and insurance, and health care service providers. The opportunity is vast. India can definitely build a multi-million dollar business in Big Data space.
(Edited by Joby Puthuparampil Johnson)