Accel Partners, Silicon Valley-Based Fund, Showcases 6 Startups To Cash-Rich Infosys

BANGALORE: Accel Partners snatched an opportunity to impress cash-rich Infosys when the Silicon Valley-based venture capital fund pitched at least two portfolio companies to the Bangalore-based outsourcer, according to two people with direct knowledge of the development.

Accel Partners, which counts Facebook and Flipkart among its portfolio firms, showcased six startups, including CrowdAnalytix and Paxata, before the senior management of Infosys, which is closing in to make its first investment from the $100-million (Rs 602-crore) fund dedicated to invest in disruptive startups. ET could not independently verify the names of the four other startups discussed with Infosys.

Infosys has been lagging its peers in growth but has over $5 billion (Rs 30,000 crore) surplus cash on its books. Although Sikka has had discussions with other VCs in August, Accel for now remains the only venture capitalist which has made a pitch to the country's second-largest software exporter, said a person familiar with the development.

The discussions were led by Infosys Chief Executive Vishal Sikka and Accel Partners' Dinesh Katiyar, who has known Sikka since the time both were at Stanford in the mid-90s. Katiyar confirmed to ET that he had met Sikka and senior ranks of Infosys but declined to share details. Another executive familiar with the development said Infosys' management until now has not started discussions with any of the startups.
"It's too early to say how much stake the company (Infosys) will pick in the startups," said the executive, adding that Infosys could make an investment in only one startup for now.It is not clear yet if Infosys' management has come to a decision but the executives said that since Accel is an investor in both the data-focused startups, the company may wait until the last round of discussions before it begins talks with the startups.

"Vishal (Sikka) and other senior executives have met with venture capital firms to explore potential partnerships with companies in their portfolio," said a spokeswoman for Infosys in an email response. "We are encouraged with the interest that the innovation ecosystem has shown. We cannot comment on specific companies at this time."

An email sent to Accel Partners remained unanswered. Both CrowdAnalytix and Paxata declined comment. Infosys' desire to look at data-focused startups mirrors the strategy being adopted by homegrown IT outsourcers, including Wipro, which are looking to pick up a small equity in a startup and then take the technology platform to clients.

Bangalore-based Wipro has already picked up over 14 per cent stake in New Jersey-based data analytics firm Opera Solutions. Globally too, Intel, Cisco and Dell have dedicated corporate ventures for investing in startups and mature ideas that are disruptive.

"It makes sense for IT service companies to invest in startups because they are not merely making a financial investment but are also backing the technology which they believe has the future," said Sid Pai, Asia-Pacific president at outsourcing advisory ISG.

Last month, Infosys' Chief Operating Officer UB Pravin Rao told investors the company is looking to integrate some of the technology platforms with its own offerings as it evaluates startups.

"A couple of weeks back we had one of the large VCs showcase 6 or 7 startups, so we have started the evaluation process," Rao said at the Motilal Oswal investor conference in Mumbai on August 26.

Sunnyvale, California-based CrowdAnalytix is a cloud-based, crowd-sourced startup that uses public sources of data to support analytic requirements of enterprises. It was founded in 2011 by Divyabh Mishra and claims to have a revenue run rate of $1 million (Rs 6 crore). Paxata, founded in January 2012 in Redwood City, California, provides enterprises with self-service data preparation software that does not require coding.

Prakash Nanduri is the only Indian among the four co-founders. The startup has raised $10 million (.`60 crore) until now, of which Accel has made an $8 million (Rs 48 crore) bet.