BANGALORE: In a deal that underscores the rising graph of exits for technology venture funds, Nexus Venture backed start-up Cloud.com has been acquired by US-based Citrix Systems.
Technology major Citrix has paid over Rs 1,000 crore (between $200 million and $250 million) for the cloud computing start-up, said a person with direct knowledge of the transaction. For India-based Nexus Venture, a co-lead investor in the company, the deal marks the biggest exit and the third from its portfolio since Salesforce.com acquired web-conferencing company Dim Dim in January for an estimated $31 million. "We invested in Cloud.com in 2009 when it was still called VM Ops.
Since then the start-up has targeted the Indian market and today Tata Telecom is its largest customer," said Naren Gupta, co-founder of Nexus Venture which invests out of a corpus of $320 million.
The cloud computing start-up, which has one of it largest development centres in Hyderabad, is indicative of what investors say is a new trend – the rise of India as a market for cutting edge technology. "We are seeing a new type of technology consumer in India who wants flexible, economical and easy-to-use computing solutions," said Gupta. "We picked up this trend towards cloud computing when one of our Indian start-ups NetMagic asked for such a solution," he said.
Nexus has since invested in over five cloud computing start-ups in India including cloud storage company Gluster and Aryaka with a total of $50 million invested in this sector till date. The Indian venture capital industry has for long shown a preference for technology investments.
This is borne out by the strong exits for funds from tech start-ups that have typically provided over five-fold returns to investors, says a study by IDG Ventures, an early-stage technology fund, whereas investments in non-technology firms would fetch a little over three times return. "75 companies that venture capitalists exited from were in the technology sector," Sudhir Sethi, chairman and managing director, IDG Ventures, had told ET in an earlier interaction.
His fund has tracked investments and exits in the venture capital industry between 2004 and 2009. "$75 billion of risk capital will flow into India by 2015" he said. Sethi expects a significant portion of this to flow into technology start-ups bolstered by strong exits in the sector.
For technology venture funds, sectors such as cloud computing are hot investment areas as consumers move towards flexible, pay-as-you-use solutions which is expected to create a new market exceeding $11 billion by the end of 2013, according to industry analysts.
"To bag our biggest exit in just over two years after we first invested in May 2009 is a significant return for us," says Gupta of Nexus who said his fund will increase investments in the cloud computing space next year.