The trend is reversing. NRIs are returning to India with invaluable international experience, knowledge, connections and ideas
India’s most significant advantage in global competition among entrepreneurs is the quality of people in the venture ecosystem.
For many years, some of India’s most talented people went abroad for advanced education and then stayed overseas, causing many observers to wonder how the country could achieve prosperity in the face of a “brain drain.” In the past five years, however, the trend towards a “brain regain” has accelerated. India’s explosive growth and healthy stock markets have attracted non-resident Indians (NRIs) to return in a flowthat has escalated from a trickle to a torrent.
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Yet India is not merely regaining lost talent. Most returnees have spent years, even decades, building up invaluable international experience. They bring knowledge, connections, and ideas that have been forged while working for some of the world’s most prestigious companies or founding some of the world’s most successful startups. What happens when these returnees bring the lessons they have learned back to India? Are they the key to creating a new hybrid style of company-building that fuses the best of East and West? If you are an entrepreneur in India, would you gain an advantage by having someone like them on your board of directors?
To find out how they and others like them are influencing the country’s venture capital scene, we interviewed three prominent venture investors of Indian origin who have moved to India after living overseas: Ashish Gupta (co-founder of Helion Venture Partners), Dan Sandhu (Chairman of Vertex India), and Deepak Shahdadpuri (Managing Director at Beacon India Advisors). Although all three have followed different paths into venture capital, each brings entrepreneurial experience from the West back to India, along with global networks and access, which he is applying to today’s Indian venture sector in a distinctive way.
The son of an Indian Army officer, Ashish Gupta grew up in Dehradun, Hyderabad and Mount Abu before graduating from IIT Kanpur. In 1988, he went to the US for a PhD. in computer science and after earning his doctorate in 1994, he worked for IBM and Oracle. He then co-founded, Junglee (a comparative shopping portal which was bought by Amazon) and IT solutions provider Tavant Technologies, today one of the leading IT employers in India according to Dataquest. Through the Kauffman Fellows Program, a competitive program that provides two-year fellowships with venture capital firms, he joined the Woodside Fund in the US. This proved a springboard for co-founding Helion Venture Partners in 2006.
In contrast, Dan Sandhu was born and raised in the UK, where he studied accountancy at the business school of the University of Leeds while promoting a rock band and starting a community radio station. He joined the Big Four accountancy PWC, working in due diligence, business reviews and flotations before moving into a commercial role with a startup in energy services, Mitsui Babcock. There he oversaw $750 million of capital projects in China before joining UK-based BPO firm 7c in 1998 as head of finance. When the firm was acquired by Vertex in 2002, he became the head of Vertex India and became well-known as one of the spokesmen for the Indian BPO sector and an influential figure in NASSCOM. Since becoming non-executive chairman of Vertex India in 2006, he has become a prominent angel investor.
Like Sandhu, Deepak Shahdadpuri was raised outside India, growing up in Singapore before studying law at King’s College, University of London. When summer internships persuaded him that he did not want to pursue a legal career, he joined Big Four accountancy Ernst & Young after earning his degree and became a chartered accountant in 1995. In 1996, he joined the consultancy Bain & Company in London and in Singapore, and in 1998 Bain sponsored his MBA year at INSEAD in Fontainebleau, France. Upon returning to Bain, Shahdadpuri worked in strategy consulting and the firm’s private equity practice before joining an ex-Bain colleague and INSEAD classmate, Norman Fiore, at Reuters Venture Capital, a $400 billion global venture capital fund focused on technology ventures. In 2003, he founded an early stage venture fund, FS Capital Partners, and a year later he started Gem India Advisors, focused on private equity in India. In 2006, he launched Beacon India Advisors that advises the $200 million Beacon India Private Equity Fund, which is sponsored by Baer Capital Partners.
The different path that each took into venture investing is reflected in the activities each is involved in today. Leveraging his strong technical background, Gupta became an angel investor in 1998 after Junglee was acquired and sat on several boards, including that of Daksh in India. He raised Helion Venture Partners’ $350 million fund to invest in companies at any stage of development within technology-powered and consumer services sectors such as outsourcing, Internet, retail services, education and financial services.
Shahdadpuri’s consulting background led him to focus on consumer businesses when starting his $20 million GIA fund. “I saw an opportunity in that space and relatively few funds were focusing their efforts there,” he says. Deals such as Sula Wines and Baker’s Circle persuaded him to start the Beacon India fund, which he counsels as Managing Director of Beacon India Advisors. Beacon is a sector-agnostic fund that typically invests $5-$25 million per deal, but has led rounds of up to $150 million that involve its limited partners and other selected investors, such as Goldman Sachs.
Sandhu’s prominence in the BPO sector exposed him to many startups and he became convinced he could add value to them as an angel investor. “When I originally started as an angel investor, most of my time would be spent sourcing deals,” he says. “Now I am part of the Indian Angel Network, a group of investors keen to invest in early-stage businesses, so I am approached more correctly.” Sandhu prefers to invest in sectors he understands well, such as BPO, IT, media and retail, where he finds a strong team and believes his business network can be leveraged.
Each investor notes that moving to India is not easy for a person coming from countries such as the US, UK or Singapore. Sandhu did not plan to return to India, but when the founders of 7c asked him to identify a CEO for their India operations, he ended up getting involved in setting up the operation. After nine months of traveling to India, he relocated to Gurgaon in 2001. Though his first three months were “lots of work and no sleep while we were running fast to get the business going,” he was pleasantly surprised that Vertex could retain a great team, even though India’s rapid growth meant there is a shortage of well-qualified individuals. He stayed in India because “watching Vertex India grow from scratch was like watching a baby grow, and I didn’t want to give up my baby!” Moving to India was a difficult transition for his family and it took time to settle his children, but, Sandhu observes, “There is controlled chaos in India and you can get by if you know where the control button is”. Since 2001, he notes, “A very noticeable change in India is that the business environment is more professional and individuals are global. Timelines are adhered to and skill sets are ever expanding.”
Shahadpuri became convinced that India was a land of entrepreneurial opportunity when his INSEAD MBA classmate, Minal Vazirani (co-founder of SaffronArt in Mumbai) brought 20 classmates on a trip in 1998. He continued returning, first socially and then on business for Reuters Venture Capital. By 2007, he was ready to move, observing, “Mumbai redefines the engines of global economy and as a newly married man, I was convinced it would be a great time to experience life in this city.” He adds, “Getting set up in India took some time but I feel that both professionally and personally we have made progress, having raised a $200 million fund and closed four deals committing $60 million. On the personal front, we have settled in well, found a nice apartment in Colaba and are getting into the Mumbai routine.”
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