Hyderabad-based Endiya Partners, some might say, is too much of a specialist technology venture capital (VC) firm for a market such as India. It generally steers clear of popular sectors, such as consumer Internet, and prefers to put its money behind start-ups that are building technology products and medical devices and have the potential to roll out their offerings in global markets. The firm, though, must be doing something right because it has managed to attract well-known Silicon Valley serial entrepreneur and angel investor Vinod Dham back to India for a second outing in the local venture capital market.
Stages: Seed, Series A
Fund size: $26 million
“I’ve known Vin (Vinod Dham) for over a decade from when I was in the Valley… but we didn’t specifically solicit his involvement for Endiya. It just happened that we were looking at a start-up that he was involved in as an investor. The deal didn’t materialize but he liked what we were doing,” said Endiya co-founder and managing director Sateesh Andra in a conversation with MintAsia over the telephone from Hyderabad. Dham is now on board as a venture partner at Endiya and will specifically play a role in supporting portfolio firms whose products can be taken global early in their life cycle.
Andra started Endiya in early 2015 with Ramesh Byrapaneni and Abhishek Srivastava. The three worked together at Chennai- and Hyderabad-based venture capital firm Ventureast, where they were responsible for early-stage investments. While Andra, a former entrepreneur (founded and ran information technology software firm Euclid in the Valley), started his venture capital career with Draper Fisher Jurvetson’s India arm, Byrapeneni is a cardiologist who turned to angel investing and then venture capital at Ventureast. Srivastava did stints at consulting firms PricewaterhouseCoopers and Deloitte Consulting prior to becoming a venture capitalist.
In January Endiya completed raising commitments for its maiden fund at Rs175 crore (about $26 million). Unlike most other first-time funds, it hasn’t raised a lot of money from individuals. “We decided early on that we wouldn’t go the HNI (high networth individual) route to raise the fund. We wanted a limited number of investors who would have more skin in the game and be able to offer strategic value,” says Andra. In all, the fund has raised commitments from five large institutional investors, including three family offices, and about 10 HNIs. It has already invested in five start-ups—Sigtuple, Darwinbox, Celescare, Hansel.io and Innerchef. A sixth investment has been closed recently but not yet announced and a seventh is in the works. While the firm’s narrow focus on technology products and digital health-care differentiates it from peers, the strategy could also pose some challenges. To begin with, the market in India for technology products—Endiya’s areas of focus include software-as-a-service, mobile, security and Internet of Things—still isn’t deep enough, and such start-ups invariably have to tap overseas markets to scale. The same is true to a great extent of digital health and medical devices start-ups. It’s one of the reasons the firm has chosen to back start-ups whose products can be rolled out in other markets and where Dham will play a critical role.
“The Indian market now, for me, offers a perfect storm on three fronts. One, a new era of computing power along with mobility. Two, the presence of local venture capital firms with a focus on (technology) products and global business models. And three, on a personal front, Endiya’s investment model doesn’t require me to go back and forth between the US and India, and still enables me to participate in the next 10 years of the venture capital market here,” Dham told MintAsia on the phone from California.
Dham’s first outing in the VC market in India was back in 2006 when he teamed up with Vani Kola, another serial entrepreneur in the Valley, and Intel Capital executive Kumar Shiralagi to start a VC firm called Indo-US Venture Partners. Dham separated from the firm around 2012 just before Indo-US Venture Partners raised its second India-focused fund and rebranded to Kalaari Capital.
The second factor that could become a bit of a challenge for Endiya’s specialist focus is the availability of adequate follow-on capital in the local VC market. Endiya plans to typically invest at the seed and Series A stages and selectively at the later Series B and C stages. Andra says one way to tackle that challenge is to keep enough capital in reserve for follow-on rounds. The firm plans to cap the number of investments from the first fund at 20. Andra also believes that a portion of the capital that has been raised recently by several new and established venture capital firms will flow into the sectors that the firm focuses on.