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Global Reach
Most of the firm’s investments are still in the U.S.—particularly the Bay Area—but Lightspeed has
invested since its inception in Israel, and it became involved relatively early in China. Lightspeed
began exploring opportunities in India beginning in 2005. “We looked to invest in impact companies
that were leaders in high-growth markets,” says Lightspeed managing director Jake Seid,
who—along with Mhatre and Bejul Somaia—is one of three managing directors responsible for the
firm’s India investment. He points to India’s profile of strong economic growth over time, high
savings rate, liberalizing economy, and young demographic as key indicators of opportunity.
Seid sees patterns in India that mirror where China was 4–5 years ago. Both countries have companies
with the potential to be world-class players and the opportunity to build on large domestic
markets. While India still lags behind China on that curve, Seid believes it is a place where
Lightspeed needs to be as a global firm. “We tend to take a walk-before-we-run approach,” he
says. “Our first India deal was in 2006, and today we have two India-related investments, but we
have other investments that highlight our strong U.S.-India connections.”
Lightspeed does not have a dedicated India fund, but it does have a four-person advisory team,
based in Bangalore, supporting the investment team in Menlo Park. Its eighth fund closed in June
2008, raising $800 million that will be invested largely in startup, early stage, and growth clean technology
ventures in or related to China, India, and Israel. Its seventh fund closed in 2005, raising
$475 million. Lightspeed’s two India investments at present are 4Interactive/AskLaila, a local city
search site offering event, dining, shopping, and movie listings as well as other information for
Bangalore, Mumbai, Delhi, Chennai, Kolkata, and Hyderabad, and TutorVista, an online tutoring
and test preparation site.
In selecting companies to invest in, a management team with experience in the U.S. can be important,
Seid points out, but where the company is primarily serving the Indian market, a familiarity
with domestic market conditions carries more weight. In the end, the company looks to
India less for innovation in technology—which is a Silicon Valley strong point—and more for
innovation in business models and business execution.
Seid’s India focus is on businesses that are asset-light, have low or no capital requirements, and
do not own real estate. Lightspeed also likes low-capital-intensity “shadow plays”—the hotel
management company versus the hotel operator, or the engineering/construction services firm,
boiler making firm or maker of electrical transformers, rather than the large infrastructure project
itself. Seid is especially wary of the power that large family-owned or public companies in India
have to dominate a sector. “We look for ideas the big guys can’t just copy and do,” he explains,
“and we look for markets where there is room for more than one winner.”
Cleantech is likely to offer major new opportunities down the road, Seid says, but he stresses that
the biggest India deals may not be in cutting-edge technology. “India’s economy is growing in
such a way that there’s an opportunity to create the next Wells Fargo, Goldman Sachs, or Sprint
for India,” he says, “which will not only be a winner for a 300 million-person economy, but also
for a 1.2 billion-person economy.”
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