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New VC Helion Leading Woodside Fund's Way To India
By Michelle Tsai and Marine Cole
February 28, 2006

For Woodside Fund, the risks of investing in India went way down when it joined with Helion Venture Partners, a new $120 million India fund started by Woodside Venture Partner Ashish Gupta, for deals in the subcontinent.

Direct investments would be a natural next step for Redwood Shores, Calif.-based Woodside, which already has 80% of its portfolio companies with offshore arms or sales in India, said Managing Director John Occhipinti. Though the venture firm will co-invest with Helion, said Gupta, Woodside's immediate goal is to help portfolio companies lower development costs and increase sales in Asia.

"We're really excited about early-stage opportunities in India," said Occhipinti. "Over the next five to 10 years, there will definitely be tremendous innovation. It's very important to continue to watch those markets."

Woodside's partners are personally investing in Helion and are introducing Helion to Woodside's limited partners. But the venture firm's structure precludes investment in another venture fund.

Unlike Woodside, few Silicon Valley VCs have formalized relations with India funds, but they're already placing bets. Kleiner Perkins, Sequoia, and New Enterprise Associates have made investments, and Bessemer, Battery, Norwest, Canaan Partners, Draper Fisher Jurvetson and others have made moves to establish a local presence.

India has been attracting investors for years with its IT outsourcing services, but this time VCs are eyeing the growing middle class. The burgeoning wealth among consumers has given a boost to Web businesses and mobile services, and the trend is expected to grow stronger. Indeed, Kleiner, Norwest and WestBridge Capital Partners, a longtime investor in India, all recently funded online travel companies in India.

Steering Woodside through the new venture topography is Gupta, whose angel investments in India include Daksh, a customer services company acquired in 2004 by International Business Machines Corp. Gupta is based in Los Altos, Calif. Kanwal Singh, a former Carlyle Group principal and previously Intel Corp.'s head of marketing for South Asia, and Rahul Chandra, formerly of Walden International, will round out Helion's team in Bangalore.

"There are enough companies being created in India that the deals we're seeing are very compelling," said Gupta, who spends much of his time traveling between the two continents. "But there's not enough early stage money on the ground in India. Having people who have operational backgrounds would fill a gap in the market."

Helion, which began raising capital in mid-2005, expects to close its fund by early summer, said Gupta. The new firm plans to make its first investment within the month, however, as limited partners have agreed to contribute capital on a deal-by-deal basis in the meantime. In addition to targeting traditional limited partners for its fund, Helion is also in talks with other U.S. VCs for potential partnerships.

Teaming up with a local partner like Helion cuts the risks of an emerging market that has a short history of venture investments - albeit a market that is shaping up to be one of the next hotbeds of technology innovation and consumption.

No longer just a center for outsourcing, India is transforming itself into a creator of technology with Bangalore as its Silicon Valley. "Now it's turning into front-line development," said Occhipinti.





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