Lightspeed Ventures is moving to capitalize on the exploding growth in the Indian consumer market.
The Menlo Park, California-based firm recently opened an office in India as part of this push. With good reason: The Indian economy’s fast growth has translated into a large consumer market for new startups.
“In India there’s a rising middle class that’s craving basic services that are just coming online,” said Lightspeed general partner Jake Seid, who is heading up India operations for the firm.
Last week Lightspeed announced its lead in a $10 million Series B for Bengalore-based Four Interactive, which runs Asklaila.com, an Indian version of Yelp. It’s the first India-market startup that Lightspeed has invested in.
Last December Lightspeed announced investments of $22.5 million in Mercantila and $7 million in TutorVista. Mercantila is a collection of online specialty stores selling to U.S. and Canadian consumers. TutorVista finds highly educated but cheap tutors in countries such as India and connects them with students in developed countries. (See “Lightspeed Enters India.”)
Asklaila.com has user reviews of restaurants, shopping, and events in a number of Indian cities. This is much needed because the quality of business information in India is still fairly low, compared to the U.S., where business directories are well established, said Mr. Seid said. The interest Asklaila.com has generated indicates the potential for a leading business directory for India’s 1.1 billion population.
Lightspeed is not just looking at tech investments in India. The firm is eyeing non-tech companies as well, and it plans to focusing more on growth opportunities rather than early-stage companies. “Certain consumer-facing sectors create a tremendous opportunity for basic goods and services we take for granted here—they’re just being developed (in India),” Mr. Seid said.
The challenge in investing in India is making sure the companies and business models are well-suited for the particular character of the market. “It’s about trying to apply an India lens to India as opposed to taking a U.S. formula and trying to do a cookie cutter thing,” Mr. Seid said.
Some of those challenges include the state of broadband, which is in a much earlier stage than in the U.S. “In the U.S. we’re in year eight of broadband rollout,” Mr. Seid said “In India it hasn’t started to ramp up yet.”
The companies Lightspeed have invested in have been of two types: India-focused and hybrid/global-focused. The India-focused companies, such as Asklaila.com, have operations as well as their target market in India. Meanwhile the hybrid companies such as Mercantila and TutorVista have substantial operations in India but are serving markets in the United States or globally.
Mr. Seid has been traveling back and forth to India to build up Lightspeed’s portfolio in the region and is soon going for an extended trip. Expect more investments to come.