Former Infosys CFO V Balakrishnan, who chairs India-based VC fund Exfinity, plans to raise a $150-200 million (₹1,000-1,300 crore) offshore fund to invest in start-ups that specialise in hi-tech enterprise solutions in the Indo-US tech sector.

Exfinity has launched two funds of ₹125 crore and ₹270 crore and invested in nine start-ups in India that offer products and solutions in logistics, health technology and artificial intelligence.

Balakrishnan said the new offshore fund would invest in startups in India and United States that offer innovative and disruptive technologies. The fund book is expected to open in January 2017 and close in 8-10 months.

“With rupee fund, your ability to invest outside India is limited. Sebi (Securities and Exchange Board of India) rules say only up to 25% of the fund can be invested outside India. In the tech sector, you have companies that are incorporated in the US but have back-end in India. There are companies in India but selling goods and services in the US market. So we want more flexibility to invest in the US-India corridor. We don’t want to be limited by Sebi rules.”

“Cloud (technology) is creating a structural change. With 2 billion mobile phones being sold every year world over, if you don’t have a mobile strategy no enterprise can flourish. Moreover, all the big players — Facebook, Google, Microsoft, Apple are investing in AI. That is going to redefine how we consume technology,” Balakrishnan said.

“Then there is data analytics and the IoT, wherein every equipment is going to be more intelligent. It is going to create a tremendous amount of data. It is important to know how to analyse the data consumed to build various applications,” he added.

Exfinity will exclusively focus on start-ups creating technology and products for B2B businesses. Elaborating on the firms philosophy Balakrishnan said,

“In a B2B business, two or three similar ideas can coexist. In a B2C market, the winner takes it all. A B2C business needs to grab marketshare, so it consumes a lot of capital. A B2B doesn’t have to do so. With $25-30 million, they can create a great product and become self-sustained.”

“Moreover, exits are easier in B2B. Most B2C companies never make exits. They remain private. So if you have a great technology/ product, even if you don’t generate revenue, somebody will come and buy you out. Google, for example, is buying 200 companies a year. S&P 500 companies are sitting on $1.5 trillion (₹100 lakh crore) cash. All of us (in Exfinity) come from the enterprise background, not consumer business”.

Another former Infosys CFO, TV Mohandas Pai, is a general partner in the firm. Exfinity was set up to invest in former Infosys employees’ ideas. “But then we decided to invest in any good idea,” said Balakrishnan.

Source: Hindustan Times

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