Tech Investors Bet On Indian Software Product Story

Angel investor Rehan Yar Khan has been at the forefront of investing in Indian tech start-ups, finding big success with firms like Druva Software and Olacabs.

Recently, his venture capital fund Orios Venture Partners, raised Rs 300 crore for early-stage investments in internet and software product startups. About 30-40 per cent of investors in his fund were from the tech sector, he says. "We had a lot of tech folks out of Bombay and Bangalore that had made exits and were employees and cashed in on employee stock option plans (ESOPs)," he says. (Watch video)

Despite a lot of buzz about India's internet sector, there are not many opportunities for retail investors. There are very few listed entities like Just Dial and Info Edge. Venture capital funds provide high net-worth individuals an exposure to start-ups and companies that could become very exciting in the future, Mr Khan says. A venture capital fund promoted by former Infosys honchos TV Mohandas Pai, Balakrishnan V also recently raised Rs 225 crore.

Moving up the value chain

Mr Khan is a big believer in the Indian software product story. He expects at least twenty billion-dollar Indian software product companies in the next 10 years.

"In last ten years, all the kids coming out from engineering schools, the IITs, the BITs and other schools their dream in not to make the next services company. Their dream is to make the next billion dollar product company," he says.

"Previously we just did services as we weren't exposed to user interfaces but now all the kids have same Android devices, phones and tablets they are going to see the same kind of applications as we see in global applications," he adds.

He expects the US, India, and Israel to be the three countries that will dominate software product segment.

India's information technology industry body Nasscom also shares this optimism. Nasscom is targeting nearly five-fold revenues from software products by 2020, from the current level of over $2 billion.

In his own personal capacity, Mr Khan has been investing in Indian tech start-ups for many years now, after setting up Flora2000.com, an international floral gift delivery firm, about a decade ago. As an angel investor Mr Khan's notable investments include Druva Software, Olacabs, Sapience, VuClip, and Pretty Secrets. Druva Software and Olacabs are now valued over Rs 1,000 crore, according to many estimates.

Mr Khan also notes the success story of another product company Mu Sigma, which has raised money from Mastercard among others.

Mr Khan is also bullish about the Indian e-commerce story. Home-grown e-tailer Flipkart recently grabbed headlines after it being valued at a mind-boggling $7 billion as it raised a record $1 billion in a funding round.