India entrepreneurial sector, somewhat like the sad-face comedian Rodney Dangerfield, has had trouble getting a little respect.
But thanks to professional investors like Niren Shah, that’s changing. India’s getting all the respect it deserves.
Over the past seven years, Shah, managing director of Norwest Venture Partners India, has been at the helm while Norwest has placed more than $550 million into 30 new companies in India, many in financial services and e-commerce.
Shad said the monetary value of the India’s startups, less than $1 billion four years ago, has now surpassed $15 billion.
What’s more, he believes the region abounds with opportunities for deals with the potential for big returns.
“And it continues to grow at a pretty rapid pace, and in fact, it is the fastest growing e-commerce market in the world, including faster than China,” he added.
Year-to-date through the end of October, U.S.-based venture investors have poured nearly $3.2 billion into 133 companies in India, with e-commerce, mobile and Internet companies raising a majority of the financing, according to data from Thomson Reuters. The funding amount is on pace to surpass last year’s record level.
In all of 2014, U.S.-based VCs invested $3.4 billion in 101 Indian companies, but more than half of that was raised by Bangalore-based online retailer Flipkart Online Services Pvt Ltd, which raised $1.9 billion in multiple rounds fromAccel Partners, Mail.Ru Group, Tiger Global and others.
Despite the recent rocket-like trajectory, India’s e-commerce accounts for less than 10 percent of the retail economy compared to 35 percent in China, but that is expected to reverse dramatically over the next five years.
“We’re seeing a large proliferation not only in the big cities, but in other, smaller cities, as well,” said Shah, who before he joined Norwest in 2007 was senior director of strategy at San Jose, Calif.-based eBay, where he helped manage the worldwide strategy across eBay’s global marketplaces.
Shah attributed the introduction of $50 smartphones to the explosive growth of e-commerce in India. More than 70 percent of India’s Internet traffic now comes from mobile devices, with apparently room to grow. More than 300 million mobile users are expected to jump online within by 2020.
Shah says one of the positives is that the sub-continent’s “economy is in a slightly different place” than the rest of Asia and Europe, which continue to suffer from the impact of the 2008-2009 downturn.
He also pointed out that the Indian government is in the process of dropping interest rates, which is spurring development in the digital; economy. Unlike China, which is suffering from general economic malaise, India is benefiting from a stable economic policy.
Norwest’s investments include Cholamandalam Finance, DealsandYou.com,FashionandYou.com, IndusInd Bank, ING Vysya Bank, Jain Irrigation,Komli Media, Pepperfry, Quikr, Ratnakar Bank, Shriram City Union Finance, Suvidhaa, Swiggy and Yes Bank.
Norwest’s investments in India are made out of the firm’s main $1.2 billion fund, which closed in May 2014. Norwest India invests at all stages, but prefers to do late-stage deals “so we can better understand the company.”
“And we like to have partners,” Shah said.
In June, Norwest led a $16.5 million Series B round in Bangalore-based Swiggy, an online food delivery service, with participation from existing investors Accel Partners and SAIF Partners. Food delivery has become a $6 billion market in India, primarily serving the nation’s younger professional classes who have taken to ordering meals through their mobile devices.
“This company has doubled growth on pretty much a fortnightly basis,” Shah said. “They were the fourth player, but have now become the largest.”
In July, Norwest participated in a $100 million Series D round in online furniture retailer Pepperfry. The round included Goldman Sachs, Zodius Technology Fund and existing investor Bertelsmann India Investments.
“Over the past three or four years, the e-commerce market has surpassed everyone’s expectation,” Shah said. “All of our companies are growing at double-digit rates or better.”
Tom York is a San Diego-based contributor. He can be reached at firstname.lastname@example.org.
To download an Excel file with the Top VC-backed deals in India, 2015