‘Valuations of some startups went out of control in last 2 yrs’

Financial Express,

Sudheer Kuppam, managing director at Intel Capital overseeing investments in Asia Pacific region, says he is “bullish on the entire online space in India.” Since 1991, Intel Capital has invested more than $10.5 billion in over 1,200 companies in 51 countries. In India, it has invested in companies like Policy Bazaar, MCX, FINO, and Indiamart. In an interview to Ritu Kant Ojha, Kuppam says, “There is too much money chasing too few deals in India which is pushing up valuations of many e-commerce startups.” Excerpts:

Is investing in technology-based startups part of Intel Capital’s strategy?

India has 11 per cent to 12 per cent penetration of PC (personal computers) and broadband which is quite low compared to developed countries. We want to enhance the PC and broadband penetration so many of our investments are supporting that use of technology in startups.

There is tremendous need for education and healthcare related infrastructure in India. Do they excite you as an investor?

Education and healthcare have plenty of upside in India. If you bring in IT in both these sectors, India will benefit tremendously. Look at the IPOs of the companies in the education space, the likes of Everonn and Educomp have done really well. However, there are a lot of hurdles for IT to enter healthcare in India. We are trying to support innovation in healthcare sector so that we can kickstart some technology penetration in that space.

Are some of the startups funded by you finding it difficult to go public?

I disagree with that because any business that has solid fundamentals and is growing really well can get listed any time. In these same market conditions, MCX, which was funded by us, came out with an IPO and did well. There is plenty of money available out there looking for a good business with sound fundamentals.

Is their enough technical expertise in India to handle increasing number of equity deals?

In the last five years there has been significant change. Now, we see more and more experienced lawyers available in India to do equity deals. Earlier, there were very few lawyers in India who really understood how to execute such complicated agreements.

What are the growth prospects of online businesses in India?

Valuations of some of the companies did go out of control both in 2010 and 2011. This is a classic case of too much money chasing too few deals. However, we continue to be bullish on the entire online space in India just because in the next 4-5 years India will add another 100-200 million broadband subscribers. That will change the demand-supply equation. All online businesses are going to experience tremendous growth rate in the years to come.

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