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VC’s Domestic Partners
August 6, 2006

Helion launches a bellwether for how to do venture capital in India.

Two years ago, when most venture capitalists thought about opening an office in India, they hopped on a plane and hoped for the best.

Later, when VCs mulled opening offices in Bangalore, they would hope their limited partners wouldn’t become alienated by the new exposure to foreign investments.

All that’s changing. Nowadays, partnering is increasingly popular, and the close relationship between the newly minted Helion Venture Partners fund and Silicon Valley’s Woodside Fund is instructive (see Helion Raises $140M for India).

Helion, which announced Thursday it had put together a $140-million venture fund focused on emerging technology businesses in India, was founded by Ashish Gupta, a former venture partner at Woodside, which is based in Redwood Shores, California.

That close relationship that Mr. Gupta developed with Woodside during his tenure there will serve both firms well. In effect, Helion will also act informally as Woodside’s partner in forthcoming deals on the subcontinent by allowing Mr. Gupta to look at deals “in country” and know that he could syndicate deals between Helion and Woodside down the road. Woodside, in turn, gets a trusted partner with Silicon Valley experience, and deep knowledge of how Woodside looks at deals.

Hand in Glove
At the moment, the relationship between the two firms is hand in glove. All of Woodside’s partners have backed Helion as limited partners, using their personal wealth, supplemented by a number of as-yet unidentified Ivy League university endowment funds.

Dan Ahn, managing director at Woodside, said he had a high level of confidence in the team, having worked alongside with Mr. Gupta.

“We’re going to maintain a close relationship. The plan is to look for ways to cooperate, in ways we can add value beyond money,” he said.

Would they consider co-investing with Helion? “Absolutely, without a doubt,” Mr. Ahn said. “Ashish is a great guy, and we were not ready to open an office there, because we’re known as a Bay Area, Silicon Valley-focused fund. But we felt he had the right strategy to do a fund there, and it made sense for him to start a separate fund that we can offer help and support to in different ways.”

Helion is just the latest fund to open its doors in India. Venture capital in Western Europe, Asia, and the United States is flowing into the region, attracted by low-cost locations, and the opportunity for big exits.

“Helion is going to be looking at technology-enabled service companies, which are not capital intensive, and they don’t need lots of equipment. For the dollar, you can get twice the number of companies started,” said Mr. Ahn. “From there you can move from normal venture ownership of around 20 percent to get a larger portion of the company.”

The fund’s investing strategy will be stage-agnostic, and to some degree technology-agnostic. In a statement, Helion said it intends to invest both in companies that create technology products and services, as well as nontechnology businesses that leverage technology.

Capital Isle
Though it has two offices in India—one in Bangalore, the other in Gurgaon—Helion, like many VCs operating in India, is incorporated for tax reasons on the tiny island of Mauritius, located in the Indian Ocean off the east coast of Madagascar.

Until recently, Mauritius was best known as the place where the dodo bird became extinct. VCs active in India know it better as the Cayman Islands of Indian Ocean. Owing to treaties with India, a headquarters in Mauritius allows a firm to avoid getting taxed twice, and is otherwise a useful vehicle for U.S. venture firms to invest in Indian companies.

Island location aside, Mr. Ahn said the new fund has an immense opportunity before it.

Other VCs that operate in India are very generous in their praise of the Helion team,” he said. “My personal opinion: I think it has the opportunity to be the leading venture firm in India, and I say that with a straight face.”

                                      
 

 

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