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Venture capital firm Bessemer Venture Partners, which has invested in the likes of Swiggy and BigBasket, said that the cybersecurity segment is poised, in terms of investments, to take off in India on the back of rising instances of data fraud.
The segment has been “fertile” for Bessemer globally, where the VC has made over 30 investments. It is now starting to mature in India in terms of scale, enough for Bessemer to launch a road map on it, said Vishal Gupta, partner, Bessemer Venture Partners, in an interview with Mint.
Bessemer invests in companies on the back of its investment ‘road maps’, which are the firm’s outlook or an investment thesis on a segment. Its longest running road map has been in consumer internet, on the back of which it invested in Indian startups such as Swiggy (which it has exited), Bharat Matrimony, Snapdeal, BigBasket, and Urban Company among others. Its other road maps in India include fintech, healthtech and Software-as-a-Service (SaaS).
Road maps to success
“Cybersecurity has been fertile ground for us globally–we have invested in over 30 companies,” he said, adding that one of the top companies in this space VeriSign was incubated in Bessemer’s office.
“The question of cybersecurity has existed for 50 years, but in a road map you are always trying to answer—when is it taking off? We think the timing from an Indian ecosystem (perspective) looks good today—given the data protection bill has passed and the rules are on the way. The fact that lots of frauds on mobile transactions, lots of frauds on lending, lots of frauds on insurance are happening—now is the time where a bunch of these ecosystems are emerging and where the market is large enough (for investments),” he said.
The VC has evaluated several investments in this space, but has yet to strike a deal. Other new road maps that it is trying to build out include D2C (Direct to Consumer), health-insuretech, he said.
Gupta started his career as a an executive assistant to the chief executive officer at HCL Technologies, spent several years building (Anil Ambani-backed) Reliance Capital’s private equity arm, before joining Bessemer in 2006 to start its India office. The firm initially invested in scaled businesses looking for growth capital, much before “venture” investing was widespread in India, according to him.
But since then it has evolved into writing seed stage to series B or series C cheques ($5 million to $50 million). Through Bessemer’s Century Fund, it can also look at larger ticket sized investments as well.
Platform strategy
Not every road map turns into an investment, he said. In addition to road maps, one of the firm’s successful strategies has been in “platforms,” Gupta said.
“One of the themes that I love is a platform play. All the deals that I have done on the fintech, software (such as Lentra or Perfios) are platform plays,” he said, describing it as “picks and shovels’ strategy—wherein the investor makes a bet on the firm enabling manufacturers, instead of the manufacturers themselves. This strategy allowed Gupta to make investments in fintech and insurtech segments, without taking the credit risk of a fintech lender or an insurance business, he added.
“As the saying goes, when there’s a gold rush, you better sell shovels versus digging for gold yourself, because you may or may not find it,” he added.
Many of its portfolio companies, invested through these themes, are now scaled enough that they can go public.
“We have a large roster of companies that can go public,” Gupta said, though he declined to name them.
Nine of its portfolio companies have gone public in the last several years—beginning with the likes of Motilal Oswal, Indian Energy Exchange, Home First Finance Co., IL&FS Transportation Networks (ITNL) to the likes of Medi Assist and Bharat Matrimony.
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