Venture Q&A: Peter Wagner
Rebecca Fannin recently chatted with Accel Partners’ Peter Wagner, who heads up the investment firm’s strategy in India.
Accel's strategy in India closely parallels an approach used in China a few years earlier: raise local funds, appoint local teams and give those domestic partners investment authority while making sure they collaborate globally within the extended Accel network. Wagner keeps regular watch from the firm’s base in Palo Alto and travels once a quarter to India.
Q: What made Accel choose India as its next location to expand?
A: When you’re tech and media centric like we are, India is an obvious candidate. Our portfolio companies are doing business there, the market has strong growth characteristics and there’s a large talent pool.
Q: How does India fit in with the firm’s global strategy?
A: We feel that our global strategy is not complete without establishment of a platform in India as well. A lot of the benefit that Accel can bring has to do with our global network (China, Silicon Valley, London) – the access to resources and the networks. Without India, it’s an incomplete story. India is a must-do, must-lead market opportunity for Accel to deliver.
Q:Why do you think that China has generated more entrepreneurial homeruns than India has, for instance with NASDAQ and NYSE listings?
A: China is farther along in its development than India and it will take a while for India to catch up. The economic reform began in China in 1978-79, and it began in India in 1991. The second reason is that China can mobilize a lot more quickly than India with its pluralistic government.
Q: How committed is Accel to the Indian market?
A: You have to have a lot of patience and you need multi-year patience from the limited partners. We have a subset of limited partners who are interested in emerging markets and we know who those are. We’ve spent time talking with that group, and they are very excited about the prospects.
Q: When we will begin to see more exits from entrepreneurial companies in India?
A: We DO need to see exits, and once we see a few good events, the floodgates will open. This is a marathon, not a sprint. And we are looking at India with a long-term horizon.
Q: What’s is Accel strategy for India, both venture investing and growth capital?
A: Last year, Accel raised a $60 million fund for venture investing in India, and we teamed up with a local group, the Erasmic Venture Fund, to form Accel India. We have a team of four investors in Bangalore who head up our venture investments.
For growth capital, we’ve recently appointed a managing director – Neeraj Bharadwaj – to head up that initiative for us from Mumbai. We may be expanding the team by one or two people.
Q: Will Accel be raising a separate growth capital fund for India?
A: Setting up a separate fund for India is something we are considering. That’s a strategy that we pursued in other regions, such as China. For now, we’re investing from our $480 million growth fund raised in December 2008 to complement our early-stage investing.
Q: Where do you see the investment sector opportunities in India?
A: Most of what we do has a tech flavor to a broad investment thesis. We are not doing infrastructure or real estate, for instance. We’re looking at several sectors: tech-enabled services, mobile, media, life sciences, and we have a growing portfolio of deals in biotech as well.
There’s an interesting life science ecosystem developing in India, and a lot of pharmaceutical companies that are aimed at emerging markets are doing well in India. We have a couple of interesting companies in this space – for instance, Inbiopro, which does high-end knowledge process outsourcing for generics and has a team of founders who are leading lights in their field, world-class PhDs.
Q: The best-known company in the Accel portfolio is Facebook. Do you have a Facebook in India?
A: Facebook is the Facebook of India. Facebook hadn’t penetrated India as recently 2007 or 2008, but it’s now eclipsed Google’s Orchid social networking site. The global nature of Facebook and the utility of its platform is a lot higher. Also, in India, unlike other markets such as China, there wasn’t a language barrier for Facebook to overcome.
Q: What are some other highlights of your portfolio in India?
A: Chakpak, which is a social networking business built about Indian movies, music and celebrities; Flipkart, a leading online bookseller that’s become a master of coping with the myriad vagaries of doing business in India; and Myntra, an online personalized goods seller of customizeable designs for t-shirt, mugs and all kinds of merchandise . . . to name a few.
Q: How’s the timing now for moving forward with more investments?
A: We have the beauty of missing the first wave of investing in India. There was a bubble in India around the same time as the US dotcom bubble, and it ended badly with a couple of firms getting out of the market that wasn’t ready for it. Now, we think the market has caught up, and we want to take advantage of for example, the huge online and mobile population that’s developed.
More on North America
Latest News
Asian GPs slow implementation of ESG policies - survey
Asia-based private equity firms are assigning more dedicated resources to environment, social, and governance (ESG) programmes, but policy changes have slowed in the past 12 months, in part due to concerns raised internally and by LPs, according to a...
Singapore fintech start-up LXA gets $10m seed round
New Enterprise Associates (NEA) has led a USD 10m seed round for Singapore’s LXA, a financial technology start-up launched by a former Asia senior executive at The Blackstone Group.
India's InCred announces $60m round, claims unicorn status
Indian non-bank lender InCred Financial Services said it has received INR 5bn (USD 60m) at a valuation of at least USD 1bn from unnamed investors including “a global private equity fund.”
Insight leads $50m round for Australia's Roller
Insight Partners has led a USD 50m round for Australia’s Roller, a venue management software provider specializing in family fun parks.