On Monday (Dec 19), I attended the soft launch of Mentor Partners, a unique technology-focused seed fund, in Bangalore. The firm plans to initially invest $1 million each in 10 product-focused companies in the IT and telecom space: around $500,000 as seed investment or “bridge loan” and the remaining as part of the first round investment along with other Venture Capital firms.
With two partners on the ground in Bangalore (Ravi Narayan who earlier co-founded Nextone Communications in the US and V.Prabhakar, a co-founder of Bangalore-based software testing services firm RelQ), Mentor Partners will help its investee companies get access to top companies in India, the US and other markets via its about 35 other members in its network. The network includes those who are either operating managers (like Vish Narayanan, Head of Telecom Operations at General Motors in Chicago) or “been there, done that” entrepreneurs (like Rosen Sharma who has founded several start-ups like Solidcore, VxTreme, Ensim, Stratum8 and Green Border).
While the number of entrepreneurs with good products ideas is growing rapidly in Bangalore and other cities, the bane of genuine early-stage investments in recent years has been lack of ability and willingness on the part of VCs to provide seed capital (a typical VC firm cannot invest less than $3 million) and more importantly, play a hands-on role in growing start-ups.
Mentor Partners plans to raise its corpus from high-net worth individuals and Silicon Valley venture firms. (Several Sand Hill Road firms have recently made similar investments into local VC firms in China. There are several reasons why it makes sense for Silicon Valley firms to make such indirect investments-despite the issues it create with respect to “double carry fees” for their own investors. For instance, they don’t have to prematurely invest in setting up a full-time team and office in these developing markets. Plus, they get proprietary deal flow for making follow-on investments.)
A key source of strength for Mentor Partners is that there are enough follow-on investors (including some two dozen Silicon Valley VC firms and strategic investors either already on the ground or very keen to invest in India) who can invest $3 million or more into their portfolio companies – when they are ready for it. Plus, as B.D.Goel, a member of the Mentor Partners network, points out, “success” for such a seed fund would be in validating the business models of their investee companies and helping them access name-brand investors as part of the first round. Mentor Partners will then rely on the follow on investors to take its investee companies to the next level, rather than having to hand-hold companies all the way to an exit. For entrepreneurs too, this is much better than having a larger fund invest $1-3 million when their products are still being built and then, just when they seem to be getting their marketing act together, start pushing towards a premature exit.
Mentor Partners’ model-including its relatively small fund size and its unique partner network-is a welcome addition to the Startup-VC ecosystem in India. What’s even better is that there are more similar seed funds that are either up and running or being raised. While Bangalore has seen the launch of the $3 million Erasmic Incubation Fund, Mumbai-based angel investor Mahesh Murthy has teamed up with Pravin Gandhi (a co-founder of Infinity Venture) to raise a $10 million fund to be called, well, “Seed Fund”.
Here’s hoping that these seed funds-which are filling an increasingly obvious and large gap in the eco-system-will close their funds quickly and invest in creating some very exciting technology companies out of India in 2006.
Arun Natarajan is the Founder of Venture Intelligence India, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.
- Tall Tales told by Grandmas and Venture Capitalists - February 7, 2014
- If only Abhimanyu knew ‘The Art of The Exit’ as well… - January 28, 2014
- “Accelerators should not try and be all things to all people” - March 28, 2013
i am looking for seed capital to start my own venture and ready to share 50 -50 . i have 5 to 10 concepts i would like to have an appointment with serious people who are interested in it my contact number is 8892925580.
We need funds for manufacture and market natural sweetener in India. The venture will be blessing to 37 million diabetic population in the country.The need is USD 2 million.
we have a 4 year old women’s magazine being published from mumbai,with top clients inclusing national corporated and MNCs participating in the same a quality product, we need funds to expand this magazine as well as to get started on couple of very exciting print projects.
you may get in touch with us on firstname.lastname@example.org
At the outset, let me introduce myself, Yadavalli Srinivas. I passed out my MBA degree in 2001 and have worked with the organisations of the likes of Dell, iGATE Global and ORACLE Corporation in Sales and Marketing Roles. I am planning to venture on my own with the relationships I have built ove the last 6 years. Right now we have a orders worth 125,000 US$ in hand. The clients are based out of India and I also have a very strong pipeline too. We are seeking the help of an investor to get started on the same. I would require atleast 500,000 US$ for a period of 3 years. If this looks interesting please revert back at the earliest so that we can discuss the same further. We need to get started these projects by first week of september. I can be reached on 09849014198.
Look forward to hear from you.
Do VC or angel funders use the services of a very experienced, well qualified person like me with skills in diverse verticals to conduct due diligence, sit on boards of companies etc. After being a Serial entrepreuner and being involved in a few cos I am looking forward to a very meaningful activity which will excite me though I will have limited time to spare
Any suggestions or thoughts ?