India’s GenNext scours world for ecommerce startups
Billionaire Mukesh Ambani is scouting for startups that may dovetail with his plans for e-commerce and phone services in India. For that, he is willing to look as far as Israel and Silicon Valley.
GenNext Ventures, owned by Mr. Ambani’s Reliance Industries Ltd., is talking to other venture capital firms and private equity investors in those countries and in Britain to pick out candidates, said managing partner Vivek Rai Gupta. The selected startups could use Reliance’s network to gain access to a market that is now the biggest for Facebook Inc. after the United States.
“It can be a two-way street,” said Mr. Gupta, who headed the India operations of consulting firm A.T. Kearney until 2008.”It gives them an opportunity to come to a big market like India and for us, it is an opportunity to interface with the best new ideas from that country.”
Startups are the latest in Mr. Ambani’s gameplan as he readies his US$13.6 billion high-speed fourth-generation phone network across India, where Morgan Stanley predicts e-commerce sales will surge tenfold to US$100 billion by 2020. GenNext, backed by the refining-to-retail conglomerate, is an “evergreen fund that will invest opportunistically,” Mr. Gupta said.
“Big corporates can benefit from mentoring and sup- porting” startups, said Kalpana Jain, Deloitte India’s senior director, adding they could take advantage of “synergies.”
The Mumbai-based venture capital firm has mentored 11 local fledgling businesses at its accelerator GenNext Innovation Hub, a joint program by Reliance and Microsoft Ventures. It hasn’t yet invested in any of these.
While GenNext provides the office infrastructure and brings in industry experts to guide the startups, Microsoft brings in the rigor of running such a program, said Kattayil Rajinish Menon, Bengaluru-based director for startups at Microsoft Corp. India, which also runs a separate accelerator in the city.
“We are following the seed-to-fruit approach,” said Raghunath Mashelkar, GenNext’s chairman and Reliance’s board member. “We will hand-hold them all the way.”
The first batch of startups includes LogiNext Solutions, which helps track rail cargoes, trucks and couriers; Coitor IT Tech, a virtual changing room for customers to try on clothes on a computer screen; Health Vectors, a predictive health care analytics company; CarIQ, connected car platform; and AxleRate, a passenger safety platform.
GenNext is already inviting applications for its second batch starting in June. There would be greater focus on helping firms secure investments next time, Mr. Menon said.
Private equity and venture capital funding in Indian Inter- net firms rose almost sixfold in 2014 from a year earlier, a February Morgan Stanley report noted. Investors have poured US$4.5 billion in this sector since January 2014, it said, with e-commerce firms cornering 70% of the infusions.
GenNext has so far invested in two local companies — Kolkata-based Videonetics Technology Pvt. and Mumbaibased Covacsis Technologies Pvt. — and is open to investing in those it mentors at its accelerator, said Mr. Gupta who declined to disclose the size of the fund.
Filtering for GenNext’s second batch of startups will be tighter, with emphasis on businesses that look into information technology, retail, broadband services, homeland security and energy management, he added.
Some of the biggest investments in India in the past two years have been in online retailing, with Flipkart, the country’s largest online retailer by sales, raising US$2.3 billion in multiple rounds of funding from investors such as Chase Coleman’s Tiger Global Management LLC, Russian billionaire Yuri Milner and Singapore’s GIC Pte. Competitor Snapdeal. com secured investment of US$627 million from SoftBank Corp. in October.
“T here can be a 1 00 Snapdeals and Flipkarts in India,” Mr. Gupta said. “The digital ecosystem is blooming and GenNext wants to be at the centre of it.”