Meet Jayesh Parekh, promoter and funder of social start-ups

There are angel investors and then there is Jayesh Parekh, who has uniquely continued to promote and fund start-ups having social impact.

Parekh graduated in electrical engineering the same year when IBM was thrown out of India by George Fernandes, industry minister in the Janata government in 1978. Later, as an employee of the Big Blue in Houston, he was put into a team to restart operations in India. After completing 12 years with IBM, he quit his job to start funding ventures from diverse sectors.

Parekh is now actively involved in the portfolio selection process of Jungle Ventures, which has invested in more than 20 start-ups. The fund was in news recently for roping in Ratan Tata as a special advisor.

A Kolkata boy, Parekh spoke to Sumit Moitra when he flew down to the city to participate in the first annual meet of Calcutta Angels.

You are credited with bringing back IBM to India. How did that happen?

I grew up in Calcutta and studied at St Lawrence High School. I did my bachelor's degree in electrical engineering from Maharaja Sayajirao University in Baroda in 1978, and then entered IIM Calcutta. But after two trimesters, I left and went to University of Texas in Austin. Then, I joined IBM and was minding my work at Huston, when I suddenly got a call telling me that we have to form a group and go to India. At that time, there was no IBM in India. Like a mercenary band, we, a team of four, got together in Singapore and used to fly down to India every week, recreating the market as a joint venture with the Tatas, known as Tata Information Systems.

Later, the Tatas realised that the operations were becoming too big for them to handle. Their stake was later bought back by IBM. Here for four years, from 1989 to 1993, I was handling IBM's process business catering to industries like pharmaceuticals and petrochemicals. We used to sell mainframes, Rs 6000 serves, midrange systems like AS400 and also laptops. After sometime, I was given an option to either work from Bangalore or go back to Houston and I didn't like either.

And then the entrepreneurship bug bit you?

A. I come from a Gujju Bania family who are risk takers. I was perhaps the only one from among several generations to work for someone. I left IBM after 12 years and started promoting start-ups. Now, I am settled in Singapore. Apart from risk taking, what drove me was the enthusiasm of young entrepreneurs, new ideas which are innovative and disruptive.

Any regrets that you had after leaving IBM?

Absolutely not. My stint in India brought me in contact with biggies of process industries like Mukesh Ambani. And considering that IBM's headcount globally is highest in India, I believe that we did a pretty good job.

What has been your investment mantra?

My thesis of investment is who, what and how. Who are you investing in? If I don't like who I am investing in, I won't proceed. Then comes the idea: whether it is locally or globally relevant and whether they are disruptive enough. Once I am satisfied with Who and What, comes How. Will the client be able to execute? At Jungle Ventures, we follow pretty much the same process where the involvement of the members of the fund is very hands on. Jungle Ventures invests across Asia, and in India we have invested in ventures like Pokkt, an alternate monetisation platform for App Developers and Publishers, data analytics start-up Tookitaki or Livspace, which is an e-commerce start-up in the home design and decor space. We work with operating or venture partners who are specialists in specific areas. So, if a start-up needs expertise in social media, a person from Facebook would work with us as a venture partner and we would share our upside with that person, who is not paid anything. That's a unique model we have.

Jungle Ventures has invested in about 23 companies in the first round. Are you planning to invest more?

In the first round, Jungle Ventures, on its own raised $10 million while the Singapore government's National Research Foundation and Spring Seeds Capital co-funded another $10 million. The whole fund is fully invested now. We are coming up with our second round of fund raising and we would announce it shortly. While we are yet to disclose the size, the media is putting a value of $100 million.

You have worked with start-ups in diverse fields. Was it a conscious decision?

Jungle was set up in 2011. Initially, it was not so as there was only one person, co-founder Amit Anand, who was managing the whole show. We didn't have a team. Anurag Srivastava and me were passive entities supporting Amit. But as the number of investment proposals kept going up, we had to jump in. Our fund is opportunistic and not thematic. For the second fund, we have roped in David Gowdey as managing partner. He was earlier former operating partner at private equity firm TPG. With Gowdey, we have four partners with me and Arurag spending a lot of time at Jungle. Apart from us, Vaishali Cooper, formerly with Komli Media and eBay, has joined us as our chief finance officer. So, the eco-system has grown with fund size growing larger.

You are on the Board of major social impact funds like Aavishkaar, partly funded by the Singapore government, and SONG, owned by Soros, Omidyar and Google, which invests in SMEs. What has been the experience like?

SONG is a social impact venture. Subsequently, I left it after Aavishkaar India II fund invited me, where I joined the Board and investment committee. The first fund was $15 million and the second was $93 million. They are now raising the third fund, which is $300 million, and would be exclusively invested for impact in India. The experience of working with these impact funds was fantastic, where smart people out of IIMs and IITs are trying to solve problems of community. It's giving back to society. You can always talk of doing good, but here we were actually bringing about changes to society be in areas of education or healthcare or environment. But what these ventures did were for profit only. All the parameters applied to a venture capital applied to them also.

Which are the emerging trends where you would be putting in money?

Internet of Things is something we would be invested into once the Jungle Venture's second fund is launched. In my own capacity as an angel investor before joining Jungle, I invested in Internet of Things ventures like smart jewellery maker Cuff or connected luggage Bluesmart. I see drones and robots as big game changers and disrupters. Usages could be diverse. In Singapore, Rishi Israni and Pranoti Nagarkar are making a devise Rotimatic, which uses robotics in making rotis. These are areas involving high-tech hardware and making them in India could be challenge but I see immense opportunities for software development for drones or robots here.

We are all talking about crazy valuations on how e-com players are raising money in back to back tranches. Is lazy money crowding out sweat money?

The whole fund raising game has changed at different levels of start-up hierarchy. The top-notch entrepreneurs are choosing the venture funds. He or she is not pool calling but directly calls up, say, Sasha Mirchandani (co-founder of Mumbai Angels and founder MD of Kae Capital), asking him to connect with a specific VC. This is smart entrepreneurs getting smart money. Down the hierarchy, you have start-ups who have been to all places and then end up with some seed capital. Does it mean the venture is not viable? No. If the thesis is strong, the venture would do well. The angel investor providing seed fund might not understand the business but might get driven by gut feel. The investor is out there waiting for you. But you need to have resilience.

For venture funds, exit decision some say, are more crucial than investment decisions. How has been your experience with exits?

So far, we have exited four investments over a period of two years, one of which was an Indian venture ZipDial, acquired by Twitter. Our first exist was eBus (based in New Zealand), which is into digital distribution of TV commercials, to IMD of London. Then, we sold Travelmob to HomeAway, and Voyagin (travel discovery and booking portal based out of Japan) to Rakuten (Japanese e-commerce giant). With these three exits, we have returned 56% of the capital. We have many more good companies with us and this makes me happy.