Name the sectors that you will prefer to invest in 2009

• Healthcare delivery.
• Food and Agriculture
• Clean Technology that addresses basic needs.
• Selective parts of education and skills development.
• Services and products for semi-urban nd rural markets.
• Infrastructure in specific sections supported by the government and addressing

Name the sectors that you will not look at investing in 2009

• Consumer Internet/ Web 2.0 (people will stop paying for eye balls)
• Off-shoring KPO/ BPO (scalability issues/ increasing costs/ less differentiation)
• Pre Revenue Businesses that have high consumer acquisition costs and longer break even periods (e.g.: online travel/ hospitality industry)

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Posted by admin on March 27th, 2009 :: Filed under Economic meltdown, Interview, Investment strategy, Limited Partners (LPs), Sarath Naru
Tags :: agriculture, deal-making, early-growth, energy, exits, food processing, healthcare, India, infrastracture support services, Interview, IPO, Limited Partners, listed companies, LPs, M&A, mature-growth, PE, private equity, Sarath Naru, valuations, VC, VC/PE, venture capital, waste management, water

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One of Sarath Naru’s recent interviews where he speaks his mind on the current state of Indian Venture Capital industry while taking quite a contrarian stand on the future scene.

We will publish this in two parts. This is Part-I.

Will you see a slowdown in private equity deal-making in India in 2009?
The obvious answer is “yes”! Having said that is there a less obvious answer? There will certainly be a slowdown for all the obvious macro reasons: Amount of monies available from fund-of-fund investors for PE funds. This has come down dramatically from all reports, and as per some accounts some LPs who have committed are withholding; and all the deals that looked ‘hot’ when the economy was bubbling away, now will appear droll.

But if one looks between the lines, it is possible that in some areas investment will actually be more than the previous years in terms of VC/PE investing. (How insane is the view of mine, only time will tell) The increase will come because of two things: First, India’s growth (slower growth no doubt), but it is not a recession like in other countries; and second, because of India’s basic needs which will specifically spur continuing demand in some sectors.

My crystal ball tells me, that the deals that will get funding are those: (i) that have already built significant competitive advantages and have revenue and profit traction (but there will be very few; of these most would have raised capital already), or (ii) those that expect to further build on these competitive advantages, as well as become profitable within a round of funding (which I call as ‘early-growth’ or ‘rapid growth’ companies). It is in these early-growth businesses that I expect to see a jump in deal making.

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Posted by admin on March 19th, 2009 :: Filed under Economic meltdown, Interview, Investment strategy, Limited Partners (LPs), Sarath Naru
Tags :: agriculture, deal-making, early-growth, energy, exits, food processing, healthcare, India, infrastracture support services, Interview, IPO, Limited Partners, listed companies, LPs, M&A, mature-growth, PE, private equity, Sarath Naru, valuations, VC, VC/PE, venture capital, waste management, water

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This is a text of the speech that Sarath Naru, Managing Partner, VenturEast, delivered at the BYST Growth Fund launch function.

Welcome to the Honourable Minister, Shri Malla, Shri Sinha, Shri Viswanathan, Shri Prabhakar, Shri Gopal Srinivasan, well wishers, entrepreneurs and mentors, the media, and my colleagues from BYST and VenturEast.

If a commercial, crass vulture capitalist like us, Ventureast; If a non-profit organization like BYST; If sophisticated institutions both international and domestic that typically focus on big initiatives not small ones like ours, such as the IFC and SIDBI; If Industry captains such as Prabhakar of Newgen, Kris Gopalakrishnan of Infosys, Dr. Anji Reddy of Dr. Reddys; and others pick this effort despite many other worthy options to support; If eagerly sought after IIT and IIM graduates such as Pranay and Snigdha come and work for a pittance; If a leading micro-equity fund manager like Aavishkaar can join in; And finally, and importantly, if an important Minister follows an initiative from his past portfolio despite the huge commitments of the current portfolio, and if all these have come together, then the time must have come !

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Posted by admin on January 27th, 2009 :: Filed under BYST Growth Fund, Launch function, Sarath Naru

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