US-based venture and growth fund New Enterprise Associates Inc (NEA) has raised $2.6 billion last month for one of the largest venture capital funds – NEA 14. NEA started direct investments in India during the downturn in 2008 and has since built a portfolio of 14 companies. Its portfolio includes payment processing firm FSS, daycare surgery chain Nova and reverse logistics firm inTarvo, among others.
The India team is led by the PE veteran Bala Deshpande, who in her earlier stint at ICICI Venture, backed companies like Pantaloon Retail, Air Deccan and Info Edge (Naukri.com). Given its focus on mid-market, NEA may end up investing 15 per cent of the new fund in India, according to Deshpande. But it would also look at early-stage deals and PIPEs in India, and invest in those from its new fund.
In an exclusive interview, Deshpande also said that Indian entrepreneurs are becoming more mature in terms of fundraising and also discussed NEA’s fundraising, the current deal-making environment and the e-commerce sector. Here are the excerpts:
Last year, NEA invested in shopping comparison and e-com site Naaptol.com. Do you see more opportunities in the e-commerce sector right now?
Having seen this very closely in early 2000s, I believe that the traction in terms of volume, customer footprint and even the backend and delivery is much more real now than it was a decade ago. But I think it has become a winner-takes-all sector – both from fundraising and share-of-wallet perspectives.
I think e-commerce requires a much more broad-based market before investors start putting in serious amount of capital behind any company. It’s an industry that has to mature before we see more funding.
Over the past few years, NEA’s only early-stage deal was ValueFirst. Will you now look at more early-stage deals?
We also invested in NOVA Medical which was a Series A funding, and Naaptol, which was Series A1. But we do invest in early-stage selectively.
When we started in 2008, given the uncertainty, we chose mid-market growth equity segment – not just because of the opportunity existing in India but also because NEA has venture growth focus in the US. The idea was to communicate to the market who we are but that had to be done in a systematic manner. We could not go around saying that we would invest anywhere between $5 million-$100 million, although we can technically do so.
From NEA 13, we did some early-stage investments but didn’t do any PIPE deal. For NEA 14, we will use the same strategy where the core will be mid-market growth equity but we will push the envelope in certain sectors, both in terms of early-stage and PIPEs.
For full version of the interview, please click here.
(Edited by Sanghamitra Mandal)