Angel With A View

With the first three start-ups it funded, Tracmail, India-Life, and Peerless Audio becoming market leaders in their respective domains, the Boston-based veecee firm View Group's Indian arm is busy incubating a clutch of new ventures in house in the erstwhile Kamala Mills in Mumbai.

By Roshni Jaykar

Stroll into the offices of View group on the second floor of the two-storied Stream Tracmail House and it feels like a trip back in time. Domiciled in a textile mill (Kamala Mills) compound, the builders have done a sound task of retaining the original element of the textile mills and at the same time, creating a functional element.

The high ceilings, part glass-part concrete, enabling sunlight to stream in, huge metal exhaust pipes criss-crossing along the entire ceiling and the red brick and glass walls, help retain the original ambience of an industrial outfit. To get a better idea of the height, take 15 flights up a spiral staircase to reach the small glass conference cabin and you have a view of the entire facility.

An office park, which provides investee companies a menu of a la carte services such as immediate access to infrastructure, including high-speed internet connections, reliable telecommunications and access to inputs from an in-house team of specialists in technology, human resources, finance and accounting-all facilities an entrepreneur would want, to build companies that will bring the Internet revolution to businesses in India. Sure, the facilities help them focus on building businesses, but Managing Director, Gopal Jain of View Advisors' claims: "Entrepreneurs come here for our minds."

Agrees S. S. Srikanth, an entrepreneur in residence (EIR), who has been working with Tejaswy Nandury of View as mentor since January this year: "The kind of insecurity I had at the beginning of the year, when it was just an idea, has been reduced substantially. I am now playing a game which will prove us victorious, because of the kind of homework we have done." View will soon help take Srikanth's project 'Mindgroup' to the market to 'validate' the concept. Srikanth is just one of the three EIRs in the facility.

From the reception, few people are in view, and yet the office seems to emit some kind of buzz. As you enter the glass and wooden entrance to the inner office you notice there are other entrepreneurs at work under the View roof, strutting the floor with smiles on their faces-oblivious of the gloomy reports on the Internet economy. In the last eight months, all the projects have been funded from the $20 million Triple I or India Internet Incubator facility-the second fund managed by View.

Welcome to the world of View Group a Boston-based venture capital firm specialising in early stage investments in India and developing Internet and service oriented companies. Founded in 1995, View did begin by helping to launch a metal-injection moulding company, AFTI in Bangalore in 1997, following the bottoms up strategy for building enterprises. It soon followed up by raising the $12.3 million first fund-View India Enterprises in 1998.

Explains Mintoo Bhandari, Managing Director, View group, who virtually lives in the aeroplane, as he shuttles between Boston and Mumbai (two places where View has its facilities): "We have a vision for a company that goes beyond short sighted trends."

Adds Jain: "We look for what's exciting for the next seven years or so (life cycle of a business) and that allows us to create businesses that are competitive globally."

So, when nobody talked about CRM or IT enabled services didn't have much currency, View India Enterprises backed three enterprises-Tracmail, India-Life and Peerless Audio. It is no coincidence, that all the three enterprises, funded much ahead of the IT boom, have turned out to be market leaders in their fields and are even cash flow positive-all within a short span of little over one year.

The compelling logic for backing these ideas: View team felt that over the next decade employee-management and pension management had changed and there was scope for business there. Or in outsourcing non-core businesses--given the high quality talent at low cost and the Internet--presented India with an opportunity to serve real time needs. Result: View backs India-Life and Tracmail.

Relates Manish Sabarwal, CEO, India-Life: ''View got involved with India-Life when we were a piece of paper aiming at the pension markets. View was key in helping me think through the mutation of our DNA from a financial service company to a HR business process outsourcer." Ditto with Adi Cooper, CEO, Tracmail.

The Plus Factor

More than capital, View plays an active role in the development of companies in which it has invested by helping them acquire the best of breed technology, gain access to US and European markets and develop strategic relationships with non-Indian companies. Mintoo Bhandari says: "Our team (grown from four to 17 now) is a conduit for ideas. In fact, some of the best ideas come from Boston, through interaction with the technology companies there." At the same time, View also engages in research to find out the next best idea.

Instances galore of how View helps to provide access to international markets and appropriate strategic partners to its portfolio companies. For Adi Cooper, View was a great help in getting them customers in the US. It also aided them to vault into the global markets by doing a joint venture with Stream, one of the largest technical call centres in the US, and with Currimjees in Mauritius to cater to the French market along the way. Says Cooper: "We work with View as partners rather than as VCs."

For India-Life, says Sabarwal: "View has a great bunch of investors and advisers and often took me to meet and benchmark US companies in our space. It played a key role in opening my mind to the world and helping me keep the faith when the path and destination got blurred."

In fact, long before the domestic operations were stabilised, View nudged Sabarwal to build offshore business. Bandwidth is often constrained in early stages, and Sabarwal wanted to be sequential, but they pushed him (sometimes to his irritation) to pitch for business outside India. Left to his own, Sabarwal admits that he would have got into offshore business a little later and with a little less resource. And that would have been a huge mistake. For Peerless Audio, a 20-year-old company, View---which invested in the company -- helped it enter the US market in a big way.

The Scaling Up

It's the repository of knowledge and experience that the View team brings-that's a big advantage. Mintoo, a MIT engineer and MBA from Harvard Business School, has had experience as director and advisor to a number of Indian and US companies. Jonathan Everett was previously a partner in Skadden, Arps, Slate, Meagher & Flom, one of the largest law firms in the world. John Madison, director, has worked for Harvard Management Company and Gopal Jain, a graduate from IIT (Delhi), has been with one of the investment banks earlier.

While the entrepreneur brings domain knowledge, View brings business understanding and closeness to the market. ''Put together, we come up with a lot of ideas that have potential to succeed. But there is downside too, in promoting enterprise. Experience to a certain extent has helped them put together a RIVS model that helps in preventing investments going bad,'' says Gopal, adding, "RIVS methodology is an excellent hedging technology against risk, as it gives us the option to limit the downside of investing in a new venture."

Typically, investments in a venture range from $0.50 million to $2 million, to begin with. And they then follow a stepwise scaling approach, which enables them to achieve scale with lesser amount of capital.

What is the RIVS approach? The R (Research)-I (Identification)-V (validation) -S (Scaling) method is the four step approach. The stepwise scaling approach involves, research where the team comes up with a list of opportunities or value propositions. The next stage or identification means going out in an exploratory mode and narrowing down the list of value propositions. Validation stage essentially means seeking of confirmation of an idea either through the customer or by bringing in a partner. The investment in a venture is about $100,000. In short, through the RIVS, a programme attempts to answer questions: What is it that will make the business succeed and getting answers upfront and then letting it scale. This is a way to establish that something will succeed, by ensuring that the idea is right. Then the only risk remaining is one of execution, which is there in any business.

At present, there are about five projects under the Triple I umbrella that is at various stages of RIVS method. Though several are at identification and validation stage. For instance, Labprocure Co, which provides procurement to scientific community, will be taken to the customers soon. Explains Tejaswy Nadury of View, who is working as a mentor with two entrepreneurs including Srikanth, formerly a tech consultant with IBM: "Entrepreneurs with ideas work with domain experts under the EIR programme." For instance, Srikanth had an idea but didn't know how to structure it. By working with Tejaswy, it was possible to make it a viable business proposition in just five months. Says Srikanth: ''Though on paper I may be working with Tejaswy alone, the experience of the entire View team is available. So, the leverage I am getting, experience and insights they carry from the business side is tremendous."

How long do the entrepreneurs stay in residence? Says Gopal Jain: "as long as they see the need for proximity to View group members." Or till there is an active participation between the View and management team of the enterprise. And the charge to the entrepreneur? It's part of the investment made by View as a VC. The Triple I fund has no doubt enabled View to put in place facilities that would help them promote enterprise in the best way.

Avers Alok Kejriwal, CEO, contest2win: "I spent months looking for office space. For those entrepreneurs using the III facility, it's like walk in with your mind and clothes and just plug in."

So far, View has not exited from any of the ventures. It's a view of time and maturity or opportunity. For instance, selling a stake to an insurance company could scale up India-Life, which is already cash positive. Perhaps. But View definitely hopes to be a value adding venture investor, and as their offerings prove compelling, they too may make profits like the ventures in which they invest.
  

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