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Early stage investor Rehan Yar Khan, who has invested in some successful Indian software product start-ups such as Druva, Ola Cabs and Sapience is in the process of launching Orios Venture Partners, which will have a corpus of around Rs 200 crore. Investing since 2008, Khan has led over 17 early stage investments as seed, series-A and series-B investor. In an interaction with Itika Sharma Punit of Business Standard, Khan talks about India appealing to global investors and his expectation that many more venture capital funds will come to India going forward. Edited excerpts:
How does India appeal from an investment angle vis-à-vis other countries?
India has tremendous appeal for early stage investments. Not only is it a very large market, it is also a global producer of software. Indian Internet shopping has also reached an inflection point with 25 million online shoppers as of this year, which is seen reaching 100 million by 2019. So, it is a very exciting market to back startups. There is also a good amount of mentoring and start-up activity taking place in India, but most importantly the large Indian market makes investing in startups very exciting.
There has been substantial rise in venture capital funding in India in the recent years. Do you think this will continue to be the trend going forward?
Venture capital funds go where there are large markets and global companies, thus in my view, you will see many more funds in India soon, as they back startups addressing our gigantic market.
By when do you plan to launch Orios and what will be the size of the fund?
We hope to launch the new fund in the next three months. It will be a Rs 200-300-crore fund at the time of launch.
What will be the average size of investment the fund will make?
Orios Venture Partners will make seed investments of Rs one crore average. The seed funding might be followed on with larger sized investments.
Which are the sectors you are looking at for making investments going forward?
We will continue to mainly invest in software product companies that serve global markets because Indian startups are increasingly producing excellent products. Additionally, we will look to invest in brands going forward, as established online retail platforms are now providing tremendous distribution. Thus, I expect an emergence of strong Indian brands in the next five years.
What is the reason for this focus on software product companies, even as India has traditionally been a services hub?
India's software engineering talent is now shifting to developing software products. Getting inroads into the US is relatively easy for Indian startups, given the country's command over English language. Indian entrepreneurs are able to make user interfaces for products and market these products without much constraint in the US market. This opens up a very large opportunity for these startups -Druva, Sapience, Unbxd, Snaplion and some other companies - from my portfolio are winning several marquee customers in the US.
