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DFJ To Diversify To Mid-to-Late Stage, Non-Tech Deals; Closes 17 Deals

17 August, 2008

Leading Silicon Valley venture capital firm Draper Fisher Jurvetson (DFJ) is shedding its pure early stage venture focus in India to be a stage and sector agnostic player. Globally, DFJ, which has backed companies like Skype and Baidu, has been making early stage technology investments. In India, it will follow a slightly different approach, following in the likes of many other Valley investors like Sequoia Capital and Matrix Partners in India.

“We will primarily be an early-to-mid stage investor with opportunistic late stage investments,” Mohanjit Jolly, Executive Director, DFJ India, told VC Circle in an interview. DFJ is also looking at traditional non-tech investments in India as it sees huge opportunities there.

Jolly said: “We see tremendous opportunity in the non-traditional, high growth sectors in India, including offline healthcare, education, retail, entertainment, logistics and so on. We prefer technology investments, but India currently is more about leveraging existing technology than developing true intellectual property. Over time, as IP and product innovation takes hold in India, there may be a swing back in favor of more tech investments than non-tech.”

Jolly was, however, quick to point out that they would continue doing early stage and tech deals. “We are still early-mid stage, and prefer technology, but (we) realise that in India one has to have a tech-agnostic approach (high tech, mid tech, low tech, no tech),” Jolly said.

It’s not DFJ alone who has diluted their early stage and technology focus to a more diversified investment strategy in India. Sequoia Capital India, which manages about $1 billion in assets, is investing in India right from the seed stage (like Guruji.com) to large scale private equity transactions such as Idea Cellular. Of Sequoia’s four funds, one is a $400-million growth stage private equity fund from where it makes investments in construction and pharma companies.

Similarly, Matrix Partners India had expanded its fund size from $150 million to $450 million to also include growth, late stage and venture greenfield investments. Helion Venture Partners too raised a second fund of $210 million from which it would make investments focused on domestic consumption sectors (read: growth). Then there are others like Mayfield Fund, ePlanet Ventures, Lightspeed Venture Partners and Sandalwood Partners who have already started doing or announced intentions to make late stage and non-tech investments.

DFJ is currently investing in India out of its global fund of $700 million. It has an India allocation of $100 million from this fund. “We have not raised a dedicated India fund. Out of $100 million dedicated to India, $60 million has already been invested and reserved,” Jolly said. This allocation seems to be small for DFJ’s late stage and capital guzzling non-tech investment strategy.

But capital is not a constraint for DFJ if they spot the right opportunity. If the deal is big as $20-30 million, then they can syndicate the deal with DFJ Growth Fund, an affiliate fund of DFJ that invests in revenue stage companies with billion dollar potential. DFJ Growth, with commitments of $290 million, is also based out of Menlo Park, California.

“DFJ has been very active in China and we want to replicate that in India,” said Jolly, who moved to India last year to set up DFJ’s India office. Gobally DFJ manages about $6 billion of assets, and it executes deals through a network of 16 partner funds present in 33 cities across the world. These partner funds (called The DFJ Network) are independent and have their own limited partners, while the management company of DFJ maintains a minority interest in the general partnership of each partner fund.

 

Ramping Up India Investments

DFJ has been on a deal overdrive since it set up shop in India in mid-last year. The firm has made 17 investments including the four unannounced ones in the last 2.5 years. The new four investments include a Delhi based e-waste company, a Gurgaon based e-learning company, an Hyderabad based online publishing company and a Bangalore based semi-conductor company. Jolly said they will make these announcements shortly.

As the deal making is picking up pace, the firm has also added a Princpal to the existing team of three. DFJ has brought in Sachin Maheshwari from Opus Capital as a principal. The firm already has Sateesh Andra as a Venture Partner working out of Hyderabad.

 


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DFJ To Diversify To Mid-to-Late Stage, Non-Tech Deals; Closes 17 Deals

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