Erasmic Venture Fund, the Bangalore-based early stage investment firm, has become part of the global venture capital fund Accel Partners. The new entity will be called Accel India Venture Fund. All the current portfolio companies (about a dozen) and the four partners of Erasmic will be part of Accel India. Being part of a larger global entity means more money power, plus the global networks. Accel India is raising a $60 million fund later this year. Erasmic’s current fund size is not disclosed. In any case, early stage entrepreneurs in India will have a reason to rejoice as they will have more money to draw as long as the fund keep its focus on early stage companies intact. This is the second instance of an Indian venture fund joining hands with a global fund. In 2006, Westbridge Capital Partners merged with Sequoia Capital. Prashant Prakash, Partner, Accel India Venture Fund (that is his new designation), speaks to VC Circle’s Shrija Agrawal in an email interview on what led to the combination.
Why did you merge with Accel Partners?
Teaming up with Accel would make us part of Accel’s global platform; this would make our team more effective in multiple ways: 1) Provide us access to specific domain expertise of Accel’s global partners 2) Attract India’s best entrepreneurs who would want to take advantage of Accel’s worldwide network 3) Help our companies achieve greater success by collaborating across key innovation hubs around the globe.
Did you face any disadvantage being small as a fund?
There were definitely some disadvantages of being a smaller fund. With our increased fund size, we hope to have larger positions in our portfolio companies and support them through multiple phases of growth/financing rounds.
How does the economics work in the post merged scenario?
Would like to skip this question, hope you understand the confidential nature of such economics.
What is the status of your first fund? Will the ownership change take effect from the second fund only or is it retrospective?
The Erasmic name will no longer be actively used. The existing Erasmic Venture Fund, its portfolio companies and investors will, of course, continue and the team will manage these responsibilities as before. Going forward, we will refer to Erasmic Venture Fund as Accel India Venture Fund I. The existing EVF portfolio companies will become part of Accel portfolio companies around the world, and will now benefit from the global Accel network.
Why Accel Partners chose Erasmic?
Accel firmly believes that a strong global strategy has its foundation in local market leadership. The Erasmic Venture Fund partners – now the Accel India Venture Fund partners – will be that dedicated local team in India. The team’s experience in entrepreneurship and the operation of start-up companies in the Indian market is critical to the early-stage investing strategy that Accel India Venture will be pursuing.
The contribution of knowledge, experience, relationships and insights from the Erasmic team will strengthen Accel’s value proposition to entrepreneurs and portfolio companies across all geographies they currently operate.
What will be the new merged entity called?
Words like “merger” and “acquisition” apply more to corporate transactions and are not really applicable in this case. We are creating a new entity together, which will be an integral part of the Accel platform. In this effort, the fund and the four Accel India partners will indeed be important parts of Accel.
Would you be raising new fund? What would be the size?
A new fund of $60 Million called “Accel India Venture Fund II” will be raised later this year.
Google had backed you in the last fund? Do you expect to get support from them in the future too?
We greatly value our relationship with Google and would continue to seek their support for our new fund.
Do we see a shift in the investment strategy of the new fund? Would you be doing deals of bigger ticket sizes? Please specify the size of the investment that you would be making as the new entity?
Like Erasmic, Accel India Venture Fund will continue to be involved from the very earliest stages of the new venture creation process. This will include seed-stage investing as well as investments in growing companies that have already begun their operations. In all cases, the Accel India Venture team will provide extensive company-development assistance and strategic support well beyond its cash investment.
Our size of initial investment would be in the range of $300K to $1 million.
Any particular sectors that you would be upbeat about? Accel partners generally invests in technology plays, while Erasmic had recently gone sector agnostic.
Accel India Venture Fund will pursue a multi-sector strategy; target sectors would include Technology, Technology-enabled Services, Internet, Mobile, Media, Life Sciences, Consumer Products and Services, and other high-growth sectors of the Indian economy.
Finally, can we see more mergers in the venture capital/private equity business? If yes, why?
Yes, geography-specific investment teams can reap strong benefits from global venture platforms.