Nexus Venture Partners recently closed its third fund with commitments of $270 million, taking its assets under management to nearly $600 million. The fund has seen participation from all existing limited partners, given that Nexus has notched up half a dozen exits. While most of venture firms' peers have moved to growth capital funding, Nexus has stayed true to its knitting of early stage venture capital funding.
VCCircle caught with Naren Gupta, Silicon Valley based co-founder of Nexus, who has two decades of investment experience. Gupta co-founded embedded software firm Integrated Systems Inc, took it public and merged it with Wind River Systems (which was acquired by Intel).
Gupta speaks about investor sentiment about India, sectors Nexus is upbeat about, seed investments and more. Edited excerpts:
Cloud has been one theme where Nexus has started investing early and also seen exits. Do you see more opportunities there?
In Cloud, we have just scratched the surface. Right now there is plethora of opportunities across from cloud management to storage to networking. The marriage of Cloud with mobility and big data is going to create new class of opportunities.
Nexus has also been making bets on social media of lateâ€¦
We are the only fund that has been 'foolish' enough to invest in social. We invested in Chennai-based Unmetric. I think the use of social media for business is going to bring a whole set of opportunities. We have also invested in Salorix. Social media is everywhere, but the question is how can you leverage it to provide consumers with better services and more insights for businesses.
Which are the other segments where you see opportunity?
I think the mobility application for consumer services is a good area. We don't know the exact opportunity there, but in 2-3 years India will have a big penetration of smart phones. The whole opening of app culture has been the biggest transformation in mobility. India is a greatly self-serviced market, especially in the mobility space, where the cost of service could be more than the product. This will create an opportunity cycle where some apps will be from US and a lot will be India specific.
I think overall we are entering an era of technology innovation in India which will be fairly unparalleled and unique.
How is the Nexus seed programme going?
Slower than we thought. But we have made a number of investments and the programme is very valuable to us.
There is argument against raising seed money from VC firms saying that if they don't follow up in Series-A, the portfolio firms find it hard to raise money from other VCs. What is your view on that?
There are three reasons we may not like to invest in a company that we have seeded. First is that concept does not make sense or is proven, where everybody saves their time. Second is that the company is good, but there is not a chemistry match between us and the entrepreneurs.
Third could be that our focus has evolved. Seed programmes don't come with any obligations. I have not seen any situation where the entrepreneur has not been able to raise funding.
(Edited by Prem Udayabhanu)