Ajit Nazre is the point main in India for Kleiner Perkins Caufield & Byers. The former SAP executive has been with the firm since 2003 and invested in Info Edge (India) before its wildly successful public offering last year.
We talked to Nazre about what has changed in India and how investors and entrepreneurs are overcoming regulations, fear of IP theft and the lack of high-bandwidth broadband penetration to build and finance great companies. I’ve attached an excerpt below. VCJ Subscribers can get the whole interview here.
Q: Tell me about your investment in Info Edge, which operates job website Naukri.com, and its subsequent IPO.
A: We’re investing together in India with Ram [Shriram]. We talked to Sanjeev [Bikhchandani, founder and CEO of Info Edge] in July 2004. Then, in 2005 we had more concrete discussions. We ended up investing at the later part of 2005. They were cash-flow positive and generating revenues. Sanjeev is just a great entrepreneur and we were fascinated by him. He did not need capital. He was looking for people that can help him.
Q: A lot of other VCs have seen the IPO of Info Edge as validation that VCs can make money in India. Some have even complained that it has led to higher valuations for consumer Internet companies comparing themselves to Info Edge. What do you think the affect has been?
A: For a lot of the folks who have just started in the last two years or so to compare themselves to Sanjeev is a little premature. He’s been at it a long time. This guy started the business as printed job listings in 1987. It’s not easy to build a consumer Internet company in India. The comment that all consumer Internet companies feel they should be valued higher, because of him, is premature.
It’s positive for India, though. It is great news for Indian entrepreneurs that are willing to work hard. It shows they will be rewarded by the capital markets.
Q: What are the biggest challenges for consumer Internet companies in India?
A: Though Internet penetration has increased, it’s still no China or U.S. There are 20 million to 25 million Internet users. Broadband there is defined as 256k. What can you do at 256k? Imagine that. What you offer as a service to the consumer is heavily constrained by that.