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“Tourist VCs Will Disappear”

23 January, 2009

Naren Gupta is the Co-Founder and Managing Director of Nexus India Capital, a Mumbai based venture capital firm with about $300 million under management. Gupta, armed with a President’s  gold medal from IIT Delhi and a PhD from Stanford University, is an experienced entrepreuenr turned VC. He co-founded Integrated Systems Inc (ISI), a leading embedded software company in 1980 and took it public in 1990. He served as ISI’s President/CEO till 1994 and as its Chairman till ISI merged with WindRiver Systems in 2000. He subsequently served as CEO and Vice-Chairman of Wind River Systems. VCCircle’s Shrija Agrawal caught up with Gupta for a brief chat recently. Excerpts from the conversation:

How is the current economic crisis different from the past one?

This is pretty deep, across all the stages. This is broad based, affecting all the countries. The growth will significantly slow down in the next few quarters.

What is your view on the VC/PE scene in India going forward?

The private equity scene in India will see a large dispersion. There is a huge gap between those who have been able to build great companies and those who have not. Only those who have been able to build quality companies will stick around.

There will be a shift to quality VCs who have been able to build strong companies. The tourist VCs who used to visit this side of the world twice a year will disappear. The VC/PE mix is not homogeneous in India. I am a strong believer in the fact that people who have strong finance experience should do private equity and those who have strong operational experience should do venture capital. This is the time when such capabilities will be put to test. I think that the best way to manage in the current environment is to get back to basics.

With every early stage fund in India wanting to do late stage/ growth stage funding, what is your view on the VC scene in India?

It’s good if the competition goes away. We at Nexus will continue to do early stage. We have the capital to invest at an early stage in companies. We are sitting on capital and we are looking at investing aggressively in this year.

What is the impact of crisis on the portfolio companies? Now that a lot of companies have cut down their online ad expenditure, how is Komli doing now?

In these times of crisis and reduced expenditure environment, where advertisers want to meet the right kind of audience straight, they rely more on the services of companies like Komli which help them reach their target audience straightaway. So, it’s inversely proportional. Komli can work well even if the sites are not doing well.


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“Tourist VCs Will Disappear”

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