Entrepreneur (E): Can you tell us briefly about Intel Capital’s interest in venture capital?
Arvind Sodhani (AS): We’ve been investing since the mid-80s. Intel Capital investments have always been driven by a desire to pursue technology adoption and applications forward; to build the ecosystem surrounding the PC and encourage entrepreneurship and innovation in technology. We announced our Rs.1,250 crore tech fund in India in December 2005 and are currently investing from that. India has a lot of entrepreneurship. It is a powerhouse of software development and hence it was appropriate to have a fund dedicated to India.
E: How is VC funding different in the US versus India? What does an entrepreneur need to secure funding?
AS: The VC industry is not that substantially different from other parts of the world, other than cultural norms which are different. Environment for success and growth, or efforts made by the government to encourage entrepreneurship, are different. In China, the government goes out of its way to encourage entrepreneurship and innovation in technology, by providing incubation centers, buildings and facilities.
E: Which sector will be the big game changer this decade? Where do you place your bets: mobility or consumer internet?
AS: In India, you are benefiting from a very high growth rate. India is going to experience 7-10 percent growth in the next seven-10 years and that provides a different growth opportunity for startup companies. Not like the U.S., where growth rates are not more than a couple of percentage. Criteria for investing in the US will be different from what a startup company will do in India and China. We are investing in applications, devices, software and services and data centers. You cannot pick one and put all resources there, as they all move together. Without a wireless device or communication infrastructure, investing in data centers is meaningless as devices have to be connected. These all go together in the form of an ecosystem and have to be invested in and pushed forward at about the same speed. As far as mobility and consumer internet go, we are investing heavily in both and the potential for each is great.
E: What are the emerging opportunities for entrepreneurs in the tech space?
AS: In India, technology adaptation is at the low end of the scale. There are opportunities in data centers, communication and infrastructure. Education is big, because in India ultimately there are not going to be enough schools to house the growing youth population and it will all have to be done online.
E: You made your first investment in the healthcare sector this year in India. A late entry into this space?
AS: We have invested in this space in other parts of the world. Our focus is on connected devices and computing all over the world. Healthcare is going to be one of those applications that is part of the overall connected world.
E: You don’t have any investments in pharmaceutical, bio-technology or retail?
AS: Our latest investment Fashionandyou is, to some extent, in the retail space. We are unable to comment on or describe what our next investment will be. We announce it as it happens.
E: How has entrepreneurship changed in India?
AS: A lot of role models are now in India. Infosys was a role model in the technology space. The seven founders did extremely well and it is now a global enterprise and listed. That’s a fabulous example that other companies are looking to follow. India is a very entrepreneurial country, with people who are just as entrepreneurial, if not more, than in other parts of the world.
E: What do Indian businesses and/entrepreneurs lack?
AS: I don’t find them lacking in any respect. If anything, a startup entrepreneur faces more hurdles in India than any part of the world.
E: What is your investment strategy?
AS: We do a very vigorous due diligence. We are looking for financial viability of the company as well as strategic relevance to our ultimate goal. As any VC would, we look at the founders, capability, their understanding of the market, skills and background at being able to manage a startup. We look for a management team, founders who are capable and have the entrepreneurial drive to get things done. So, basically, the right set of skills. Plus an idea, which has a total available market, that is worth pursuing. If the market size is Rs.100 crore, then it is not worth it. Then we look at competition; if it’s already been tried out, it’s not very interesting.
E: In which regions do you see maximum entrepreneurial activity?
AS: We are investing aggressively in emerging countries. We have just started investing in Vietnam, South Africa and Turkey as well.
E: What advice do you give startups when acquiring customers?
AS: For startup companies, acquiring companies is the hardest thing to do. One of the things we do is help them with that. Offer a product tailored to meet the needs of functionality which is cost-saving. Large corporations are not looking for just a product but also good sales service.
[The author was on a sponsored trip to Intel Capital Global Summit 2011 in California]
Source: Entrepreneur Magazine
