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Global Reach
developer Tejas Networks in Bangalore. Norwest is an investor in Bangalore business process
software firm Epiance, as well as cross-border hybrids such as Veraz Networks Inc., a San Jose
telecom equipment company that outsources software development to Persistent, and Bay Area
companies like fabless ASIC chip designer Open Silicon of Sunnyvale.
The hybrid Bay Area-India business model has proven attractive for its ability to manage
cost and access specialized talent: Walden International of San Francisco has invested in
Mountain View wireless security solutions provider AirTight Networks, and Palo Altobased
Sevin Rosen Funds has had in its portfolio Teneros, a Mountain View developer of
Microsoft backup and disaster recovery solutions, and Palo Alto enterprise software developer
SolidCore Systems. All rely on product development in India.
Charter Ventures, Alliance Venture Management and BlueStream Ventures, along
with Texas Instruments’ TI Ventures, pumped $32 million into the December 1999
startup of Xalted Networks, to bring to market an advanced telecom network switch
technology that would enable mass deployment of broadband over new and legacy phone networks.
By 200, the tech sector collapse had stalled broadband rollouts, and the switch wasn’t fully
developed. Over 2003–04, the venture partners helped Xalted raise $9 million in preferred stock,
moved it to Santa Clara, and shifted product development to Bangalore. Today, most of Xalted’s
management team is Indian and the company has made a niche for itself developing service fulfillment,
billing, and fraud prevention software for the telecom industry.
Clearstone Venture Partners, founded in 1998, has invested in more than a dozen early
stage companies that rely on back-end operations in India. The Menlo Park VC firm had
also aggressively recruited Indian managers for its $200 million Clearstone Fund III, which
closed in April 2005 and includes the State of California and the University of California among its
investors. The next logical step, in 2006, was establishing Clearstone Venture Mauritius, a local India
investment arm with offices in Bangalore and Mumbai, and Clearstone Venture Advisors, a Mumbaibased
independent advisory group that serves as an initial point of contact with Indian entrepreneurs.
Clearstone initially made four India investments: $7.5 million in online bill payment services provider
Billdesk, $5 million in Bangalore mobile handset designer DigiBee Microsystems, $5 million
in Indian massive multi-player online gaming (MMOG) site Games2Win, and 160 million rupees
in Mumbai-based express delivery company Elbee Express. It has recently announced plans in to
invest in four more companies, at an average level of $10 million each, in the educational entertainment
and financial services sectors.
Silicon Valley entrepreneur Raju Vesegna’s Infinity Capital Ventures paid $62.6 million
in November 2005 for Satyam Computer Services’ 31.61% stake in Indian Internet, network,
and e-commerce services firm Sify Ltd. Infinity later spent an additional $37 million
to raise that stake to 40%. Vesegna founded integrated circuit designer ServerWorks Corp., which
was acquired by Broadcom in 2001 for $1.8 billion. He currently heads ServerEngines, a maker of
network controllers, adapters and system-on-a-chip (SOC) designs, in addition to his role as CEO,
chairman and managing director of Sify.
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