Mayfield Backs Seedfund, Tejas Networks In First India Deals

By Russ Garland
VentureWire 1/17/2007

Mayfield Fund has made its first two investments in India; one in a rapidly growing company, the other in an early-stage venture fund.

The Menlo Park, Calif.-based venture firm said it joined the $20 million Series D round that Tejas Networks India Ltd. announced in November.

Mayfield also said it committed between $1 million and $2 million to a fund being raised by Seedfund, which has offices in Bangalore and Mumbai. Other investors include Motorola Ventures, Sierra Ventures and a Silicon Valley Bank affiliate. The firm's debut fund, which had been headed for a $12 million final close, soon will wrap up at about $15 million, according to Mayfield Managing Director Navin Chaddha.

With the investments, Mayfield joins the ranks of more than a dozen U.S-based venture firms placing bets in India. They include Battery Ventures, Bessemer Venture Partners, Canaan Partners, Kleiner Perkins Caufield & Byers, Matrix Partners, New Enterprise Associates, Oak Investment Partners and Sequoia Capital.

Like many U.S. firms, Mayfield has taken a hard look at investment opportunities in both China and India during the last several years. In China, it sponsored a venture fund, GSR Ventures, in 2005. It has invested directly in several Chinese companies alongside GSR.

But it saw fewer opportunities for direct investment in India, where home Internet access is less extensive. Mayfield decided its best option was to invest in a fund there that would give it an early look at companies that might join the Mayfield portfolio as they grew. "We see this as visibility and access into some very early-stage companies," said Mayfield Managing Director Robin Vasan.

Whether Mayfield will invest in other Indian venture funds has not been determined because its strategy for the country is still evolving, Vasan and Chaddha said. But Vasan added that Mayfield is not in the business of investing in funds.

Mayfield's Tejas investment is a natural for Chaddha, who will join the company's board. Before joining Mayfield last year, he was at Gabriel Venture Partners, a Tejas backer.

The Bangalore-based company, whose next financing move probably will be an IPO in India, sells optical networking equipment mainly to Indian telecommunications companies trying to keep pace with India's burgeoning cellphone market. But it has a rapidly growing business making equipment that global companies sell under their own brands. Within 12 to 18 months, its international business should equal to its domestic, Chaddha said. "We believe it still provides a home-run investment opportunity," he said of Tejas.

Other investors include Sycamore Networks Inc. Chairman Gururaj "Desh" Deshpande, Battery Ventures and Intel Capital. Mayfield declined to say how much it invested in the Series D round, led by Sandstone Capital, a Boston-based firm that invests in public and private companies in India. Tejas has raised $49 million in equity.