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Beenos, the global incubation and investment wing of Japan’s largest e-commerce conglomerate Netprice.com is eyeing investments in the Indian e-commerce space. The investment firm expects Indian entrepreneurs to be a fifth of its investment portfolio in the next three to five years.
For Teru Sato, president and Group CEO, Beenos India investment is a crucial part of the company’s investment strategy in emerging markets. For 2014, the company is already evaluating two to three firms in the e-commerce segment.
Beenos has invested in two start-ups so far. Last year it invested in Gurgaon-based ShopClues.com and Mumbai based payment solutions firm Citrus Pay. Beenos partnered with Japan-based Econtext Asia to invest in Citrus. Beenos invests through the corporate balance sheet into start-ups and the strategy will be same for India too.
“This is the right time to be in India. The Indian market is exactly where China was in 2000-2001. I think the Indian market is much more profound in terms of variety, and business opportunities. It is a much deeper market because of certain traits such as a huge population, and talent in the engineering segment. With NRIs returning back to India and wanting to play into the internet space having worked with global firms like Google, Amazon and others business opportunities are huge,” added Sato.
Two-and-a-half years back Beenos started to look into emerging markets. Since then they have done about 10 investments in five countries that include, India, Indonesia, Vietnam, Singapore and Turkey. As its investment strategy it prefers to take a significant minority stake in start-ups with a board position. In the payment services segment Beenos has been co-investing with Econtext Asia.
“We have been investing in one payment solutions company in emerging markets like Vietnam, Indonesia, Japan and China. Our focus is to work with one payment solutions provider and provide them understanding of the payment solutions market,” said Takashi Okita, executive director and CEO, Econext Asia.
Sato believes that India will see more participation from Japanese investors, who till now have been on the sidelines. “After China and the US, India is the largest internet population, it also is the region that has the third largest communities on line. Add to this a rising middle class, this allows for huge opportunities for Internet-based businesses. Add to this there is a tremendous jump in mobile usage, next big opportunity is mobile business model. Finally, with the government of the two nations now coming together for collaboration there will a huge push by firms in Japan to collaborate with Indian firms,” he added.
For Sato investment in emerging market is a patience game. “We generally prefer to stay investment for around 10 years if the company is in the payment solution. For any other e-commerce players the time is around 5 years. The way India is growing we are hopeful of atleast 10 times IRR for our investments,” said Seto.
Japanese firms have been actively eyeing Indian firms as they expand to other Asian market. This is also significant as it tries to derisk itself from China due to political issues. According Vikram Upadhyay, board, member, Indian Angel Network, and a serial entrepreneur who has spent around 14 years in Japan, expects that 2014 will see around $350million worth of PE/VC deals in e-com and tech space by Japanese investors.
In November last year Japanese consumer electronics player Hitachi bought out Chennai- based payment solutions firm Prizm payment services. JAFCO Ventures, one of the largest VC firms in Japan, part of the Nomura Group, has invested in more than a half-a-dozen technology companies in India including internet firm Apnapaisa.com, tech start-ups such as Vignani Technologies, and Microland.
