Mayfield Commits To India With $111M Fund

By Russell Garland      VentureWire     December 8, 2008

Mayfield Fund, which started investing in India in 2006 and opened an office there last year, has closed a $111 million fund to invest in growth financings for mid-market technology, consumer and infrastructure companies.

The Menlo Park, Calif.-based venture firm said it has backed six Indian companies, three of them from Mayfield India I LP, which had a final close in November after a first close in May. The new fund will invest in Indian companies aiming at markets in India. Indian companies targeting global markets will be financed from the firm's main funds, the latest of which, its thirteenth, closed in September at $395 million. One such example is Mayfield's first India company, telecom equipment maker Tejas Networks.

Paymate, on the other hand, is an Indian technology company targeting the domestic market for person-to-person payments via mobile phones. It was backed from the new India fund as were Genesis Colors Pvt. Ltd. and Geodesic Techniques Pvt. Ltd.

Genesis sells high-end women's apparel, tapping India's exploding middle class. "When the middle class gets money, they spend," said Mayfield Managing Director Navin Chaddha. He said Geodesic is an example of the third area that holds great promise -- improving India's third-world infrastructure. It provides design services for construction of steel-frame buildings. Most construction in India is concrete, Chaddha said, but steel will be required for tall buildings.

Mayfield's other two India investments, backed before the new fund closed, are Consim Info Pvt. Ltd., a Web-based matrimonial service, and Servomax India Ltd., which supplies voltage stabilizers and other technology for India's iffy electrical network.

Given the growth opportunities in these sectors, Mayfield sees no need to back start-ups but will seek companies with revenue of $5 million to $30 million. It will look to put $8 million to $10 million into each company, backing about nine to ten companies over three years. Expect the firm to raise a second India fund in 2010.

Venture investing in India is likely to fall short of last year, but Chaddha said the cool down is a good thing because "the valuations being paid were just not sane."

"I think the correction was needed but overall the opportunities are there," he said. "I think frankly the hedge fund money is out of India and all these emerging markets."

Chaddha declined to disclose any of the new fund's limited partners but said the majority are also investors in the firm's main funds. The India fund has five general partners, three of whom are also partners in Mayfield's main funds: Chaddha, Robin Vasan and James Beck, the firm's chief financial officer.

The India fund's other two managing directors are Nikhil Khattau and Vikram Godse, whom Mayfield brought aboard last year to man its Mumbai office. They remain based there along with two associates. Chaddha said the recent terrorist attacks in Mumbai had no effect on Mayfield's operations or on its investment focus.

Mayfield also is a limited partner in Seedfund, a seed-stage investor in India. And it has a presence in China, where Mayfield affiliate GSR Ventures last year closed its second early-stage technology fund at $200 million.