"Investment theme will revolve around mobile including devices, components, services, education & healthcare": Qualcomm Ventures
Qualcomm Ventures, the venture investment arm of wireless technologies and data solutions major Qualcomm Inc., has been an active investor in the early-stage space in India. A 10th of its global portfolio is in India, including Tessolve, MapMyIndia, Obopay, Capillary Technologies, ZopNow, Yebhi.com, Dexetra, Apalya Technologies and Onward Mobility. Recently, it co-invested, along with ru-Net and Indo-US Venture Partners, in mobile app development firm Apps Daily. In a chat with Techcircle.in, Qualcomm Ventures' global head Nagraj Kashyap and Indian unit chief Karthee Madasamy talk about their plans for India, market opportunities and the new wireless healthcare fund. Here are the edited excerpts.
Around three-fourths of your investments have been in developed markets like the US and Europe. How is the geographic mix changing now?
Kashyap: When we started operations in 2000 in the US, it was a major developed market that offered us huge opportunities, and we made some good investments. However, the scenario is changing now. We are seeing huge potential outside the US, especially in India and China. So, we have now started aggressively focusing on other markets around the globe. The mix of investment is shifting from being predominantly in the US to more and more outside.
As of now, we are present in seven geographies, including India, Israel, China, Brazil, Korea and Europe. Among these, India and China are playing significant roles.
Since you started operations in India in 2007, you have made 10 investments, bulk of which in consumer applications besides software. Why? Which areas are looking attractive going forward?
Madasamy: When we came to India in 2007 with our investment in Tessolve, it was just a small market and was yet to start growing. There were not many opportunities here. Now, the market has drastically changed. India witnessed a startup revolution of the sorts. We are bullish about it.
Nonetheless, we don't have any artificial investments number for the country. We have been following an opportunity-based investment strategy here, and have invested in semiconductor, consumer play and app store platforms, among others. Going forward also, we will follow this opportunity-based investment strategy. However, our key area of focus will always remain to be around mobile telecom. Within mobile, we look at everything, including devices, components, services, education and healthcare. There is no specific area. We are looking at early-stage tech firms and are currently evaluating some mobile-based health care services companies in the country for investments.
A third of your India portfolio comprises seed-stage investments. Is that going to be a bigger focus in India?
Madasamy: We are a stage-agnostic fund and can invest in early, growth, Series A and B stages. We always banked on a co-investment strategy everywhere. India is now a significant market for us. It is a very high capital market where we see an intersection of mobile happening in other verticals.
Besides, an increasing number of Indian firms are going global. For example, Capillary is an intersection of mobile, cloud and retail, and they have already gone global. The firm is growing well and has already gone to multiple overseas markets. Going forward, we will probably look through the lens of mobile, smartphone and tablet devices in the country.
You have made a few bets in e-com. How do you look at the sector?
Madasamy: I think e-commerce is still in the early stages...
But some big players have raised large chunks of money....
Madasamy: (Laughing) Even if you ask this question to Amazon, it will say that e-com is in the nascent stage in India. There are obviously different strategies played by different players. Some of them need to grow, and so they need capital. Other companies are following marketplace models, while some others are focusing on profitability. There is a need for different e-com companies in India, given the lack of modern retail, organised retail and the vastness of this country. However, we don't know what the right model is. Multiple models will be present and each model will have different capital needs. We feel that at this point, unless we see a fundamentally different way of doing ecommerce, we are not actively looking at this space in India.
How is the co-investment ecosystem working in India?
Madasamy: I don't think that co-investment is not working in India. In fact, we had co-investments in almost every company we invested in. We put money with other VCs. Our focus is to help the ecosystem grow; so we follow this model. Other VCs also look at good partners like us to co-invest. Whenever we invest, we will syndicate with other VCs.
How has the early stage investment ecosystem changed since you started? What is your view on the so-called Series A crunch in India?
Madasamy: When we entered in India in 2007, there was a gaping need for seed-stage investments. However, it has changed over the past several years. At least, a large number of angels investors came in.
Now many companies who got funded haven't shown the next level of growth to get next round of funding. So they need to hit the next milestone to get Series A funding.
Kashyap: It is like a funnel. You rather have the seed or not have it. When we started there was no seed. Not every company will succeed. However, you better have more entrepreneurs trying things out. When Karthee (Madasamy) came in 2007, it was hard to find seed stage investments in the country. Now, entrepreneurs have at least the option to try things out.
How is the startup ecosystem evolving in India?
Madasamy: The ecosystem is growing fast and our head Nagraj (Kashyap) comes to India every year. The quality of the companies has evolved quite a bit. Today, many product companies are coming up. Companies like InMobi have given huge confidence to entrepreneurs in the country.
Kashyap: It is very hard to catch up with Silicon Valley overall, but India is getting there. Everybody is trying out things, but it is hard to replicate. But once you started seeing good exits, the ecosystem will grow exponentially well. In fact, you don't need to catch up with Silicon Valley; you need to be self sustaining. We need to see more exits. Once exited, people need to start more companies. In Silicon Valley, if you already have a good exit it is easy to raise money. Once that happen here as well, we will be self sustaining.
Madasamy: It is like a cycle—one feeds the other. Seed capital was not there and now it is happening now. It is boosting entrepreneurs. Once exits happen, it will provide feedback to the ecosystem.
Kashyap: People forget that Silicon Valley has been there for 35 years. It cannot be built in a day.
For full version of the interaction click here.
(Edited by Joby Puthuparampil Johnson)