After spending four decades in America and making millions by selling his Silicon Valley start-up , Kanwal Re khi has founded his own venture capital fund, Inventus Capital Partners. His $52-million venture fund is investing in technology-powered companies participating in the emerging Indian economy.
Since 1994, Mr Rekhi has led the first venture round in numerous early-stage companies, guiding entrepreneurs to 19 exits, including six IPOs. The 64-year-old millionaire philanthropist speaks on his investments and the governments role in education.
How many start-ups will Inventus invest in and how much?
Over the next three years, we will invest in 15 companies and then, raise our next fund. The existing fund will invest in Indian companies they may be based in and outside the country with exposure in technology. We typically lead the first venture round with $500,000 to $3 million and later, it could grow to $5-8 million as the business expands.
Why are you focusing on technology firms in India? Has this industry not fallen off its high?
The tech boom will never be over. Everything you do depends on technology. It is a very high-risk business. I am not a financial person who uses spread sheets, but I play the game that I know. Everyone needs technology as a daily dose in their lives. For instance, per capita income is very low in India as productivity is very low compared to China.
This is because there is very low use of technology and poor automation. Hospitals are not automated, if they were people would not have to carry paper reports with them and stand in long queues. The technology market will boom in India for the next 30 years and the national ID project by the Indian government will be a step towards this growth.
How do you the see growth of entrepreneurship in India? How are VCs looking at this?
The beauty of an entrepreneurial set-up is that entrepreneurs imagine and deliver even before governments think of it. IT industry in India happened, government did not do it. When it started to happen, there were lot of concerns initially of round tripping funds where a company sells an unused asset to another company while at the same time agreeing to buy back the same or similar assets at about the same price. The government has now started addressing this.
How are entrepreneurial technology providers better than the larger IT companies?
Larger companies in India focus on selling the solution and not creating them. Its the emerging India which creates these technology solutions which suit the local markets.
These are not just people in Bangalore, but in Bhopal and Kanpur too. It starts off with designing a solution that is for the particular city and can then be adapted for others as well. These solutions have a better cost arbitrage than the larger companies like Infosys, TCS and others.