Responding to a popular request, we are now sharing transcripts of our investor podcast interviews in this new series. The following interview with Sandeep Singhal was recorded in July 2016.
Sandeep Singhal, Managing Director, Nexus Venture Partners, is a key player in the India-US startup corridor. The discussion spans trends in SaaS, Open Source, and the Indian venture capital market in general. If you are working in the technology startup sector with an interest in India, this is a worthwhile discussion.
Sramana Mitra: Let’s start with some kind of basic level setting. The Indian SaaS startup scene has gone
through some core realizations. India-facing SaaS is not venture-fundable. It is too slow growth a market. Therefore, if you want to build a fundable company, go global. This is what we’re hearing from all of our venture capitalist colleagues in the Indian ecosystem. Is this your approach as well?
Sandeep Singhal: We started Nexus with that hypothesis. When we started in 2006, the Indian buyers weren’t as sophisticated and weren’t spending as much money. If you were a technology provider, you really had to build a global business.
You had Naren on the show before. Naren and I partnered with the idea that we would take companies from India and bring them to global markets. Nexus has presence both in India and US. We have an office here in Menlo Park and we have offices in Bombay and Bangalore. We work with entrepreneurs who we believe can take their companies global from early on. They have that mindset of building a business that could potentially start with India but are taking a global view.
From an investment perspective, we would look at these companies and compare them to their peers in the Valley and make sure that the team we are backing can compete with their global peers. I would totally agree with you that this is not a recent phenomenon where if you want to build a large SaaS business, you have to look global. In fact, there are probably more opportunities to do SaaS in India for India but it’s tough to build very large businesses there. It will take time.
Sramana Mitra: Very slow growth. Sales cycle are so long.
Sandeep Singhal: There’s the sales cycle issue. There’s also the distribution issue. To sell in India and to sell SaaS across a large group of customers, marketing channels aren’t well developed. You don’t have very strong tech product marketing in India. All the things that have gotten built in the US are still early days in India.
Sramana Mitra: Let’s double-click down on a couple of things you said. When you are evaluating a team to check for whether this team can compete in a global business mode, what are you looking for? What have you learned to look for in terms of entrepreneurs who can actually work in a global context?
Sandeep Singhal: If you are looking to target the global market very early on, you have to understand the global customer need. It just can’t be that you’ll build a product for India and then sell it to the global market. The product definition, itself, at the start has to involve talking to global customers, getting their inputs, understanding the global landscape, and looking at the competition.
That level of thinking and understanding requires the founding team to either be in the market or somebody who has, at least, an understanding of global markets. That is our view of what works better. There are exceptions where people have found opportunities while in India.
We’ve seen open source as a big driver of that. People who are involved in the open source community out of India, when they’re working on global projects, can see the gaps and build a business around that. If you’re building an enterprise SaaS product, having a good understanding of how the business is operating in global markets is very important.