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M&A, Venture Capital, and Private Equity: A Thriving Investment Climate
Draper International began with the two partners, eight advisors (including local Indian entrepreneurs),
offices in Bangalore and Mumbai, and $75 million. Its only institutional partner was
General Atlantic. It made 24 investments during the late 1990s, most in the IT/software and
Internet sectors, among them:
• Mumbai post-production studio CMM Ltd;
• credit risk analysis software firm e-Credit.com;
• fashion apparel designer Indus League Clothing;
• Torrent Networking, a provider of Internet routing solutions, acquired by Ericsson;
• Internet CRM developer NETA, acquired by Go.com and Disney;
• Internet security appliance firm Ramp Networks, acquired by Nokia; and
• Rediff Communications, a global Indian Internet portal.
Draper, a founding member of TiE Silicon Valley, says he found the firm’s first deal while networking
there. While it eventually wrote off four investments, Draper International returned 16 times the
limited partners’ investment. Draper and Richards went on to launch the domestic fund Draper
Richards LP in 1996 and the Draper Richards Foundation for Social Entrepreneurship in 2001.
Bill Draper’s son Tim heads another successful VC firm, Draper Fisher Jurvetson
(DFJ), which became actively engaged in India in 2006. The firm’s India portfolio—
part of its core global fund rather than a dedicated India fund—includes eleven
companies distributed between cleantech, Internet, technology-enabled services, advertising, and
mobile commerce. One of the most notable is Reva Motors (see The 3-Lakh Electric Car in the
Energy/Environment/Clean Technology section of Chapter 6). New investments are likely in logistics,
distribution, and retail. More than half of the companies DFJ has invested in are led by returnees
from the Bay Area. Most are located in India’s top six urban centers, where much India’s wealth
and infrastructure is concentrated. Raj Atluru, who oversees DFJ’s India investments, notes that
while India isn’t producing core technologies, its chief attraction is in innovative service plays.
While Draper International was the first venture firm to set up an India fund, Silicon
Valley Bank (SVB) paved the way for the wave of venture investment in India that
began in 2001. When the tech bubble in the U.S. burst, SVB concluded that companies
would have to focus on capital efficiency and that India offered a promising platform for global
value creation. It also recognized that corporate boards would need to support that shift, so in
2003, SVB led a delegation of twenty-three venture capitalists to India. It was also apparent that
companies would need guidance once they arrived, so SVB started an Indian consulting business
(prior to applying for a banking license) to help its U.S. clients and their investors research market
opportunities and make introductions to potential partners, which in many cases led to operations
on the ground in India.
To monetize its presence, SVB later established a $54 million fund based in Bangalore to coinvest
with its VC clients directly into Indian startups. It also obtained a license to establish a
non-bank financial corporation, and in 2008 opened SVB India Finance, which makes loans but
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