Sherpalo Partner Launches $90M India Fund As Ram Shriram, Kleiner Shift Focus Away From India

Sandeep Murthy, a general partner at Sherpalo who managed the firm’s India investments, is launching two new funds — Lightbox Ventures I that has already acquired stakes in 6 startups, and Lightbox Ventures II, which will be a $90 million fund focused on early stage investments.

Ram Shriram, a founding board member of Google and one of the Silicon Valley’s early investors, is  shifting his focus back to the U.S. investments as part of the changes in Sherpalo Ventures‘ strategy. Kleiner Perkins too is following the same strategy. Ram, 57, was worth $1.75 billion as of September last year, according to this Forbes profile.

“I really believe that the Indian market will evolve, they (Ram and Kleiner), just have different priorities now,” Murthy said clarifying that Sherpalo and Kleiner are in no way giving any ‘thumbs down’ to the Indian opportunities.

He added that despite fewer exits, Indian startup ecosystem is ready for big investments.

“The missing element is scale in technology penetration, which is poised to accelerate in the coming years. This combination of a large market with engaging and diffferentiated customer propositions will enable the emergence of many billion dollar businesses that will not only deliver value to shareholders, but will also make India a better place,” he added.

Lightbox is also announcing a new team of four partners. Siddharth Talwar, an angel investor who founded and later sold Evolv to NIIT and Prashant Mehta, former CEO of Komli Media will be India partners. The US partners include Sunny Rao, currently CEO of ZoomIn who earlier co- founded which was acquired by eBay for US$ 350 million and Jeremy Wenokur, an angel investor who has spent the past 17 years in the consumer technology space in the U.S. and was Google’s first corporate development person.

According to the company, Lightbox Ventures II will have a concentrated investment portfolio of 8 companies in which it will invest US$ 3 to 5 million in Series A funding with an investment horizon of 7-8 years. Lightbox Ventures I has acquired equity stakes in 6 companies – GreenDust, ZoomIn, MapmyIndia, Paymate, FutureBazaar and Kotak Urja,

Sherpalo Ventures’ pace of making investments has slowed down over past few years. In 2013 for instance, Datafox and Voxel were the only two seed investments announced. In 2012, Sherpalo’s publicly announced investments included ZenPayroll and Sunglass.

Over past few months, Sherpalo has been exploring ways to offload equity investments in companies such as Cleartrip. Both Sherpalo and Kleiner Perkins who own nearly 25% in Cleartrip, have already sold their holdings in the travel site to Concur. In April 2011, Concur had invested $40 million in Cleartrip to expand its footprint in India. Since then, there have been talks of Concur looking to acquire all of Cleartrip, but nothing has moved on the ground. With the new developments, Concur is looking to play a more dominant role in driving Cleartrip, even if it’s not a full-blown acquisition.

One notable exception to Sherpalo’s rejig of its India portfolio is InMobi, which will continue to be a part of its global investment portfolio. Moreover, while Kleiner and Sherpalo are shifting focus back to their U.S. investments, Lightbox Ventures $90 million India fund comes at a time when the country’s startups are beginning to realize billion dollar opportunities in solving problems across the segments of healthcare, retail and education.

“I have been talking to LPs in the U.S. and the sentiments is not overwhelmingly positive about India — there are questions around notable exits, liquidity and lack of large companies,” said Murthy.

But he added that India’s smartphone revolution, combined with the increasing Internet penetration was too tempting an opportunity to let go.

“This is such an exciting time to be active in the consumer tech space in India. So much is changing at once – growth in per capita income, urbanization, organization of retail and technology penetration. This creates opportunities that are simply unprecedented. ”

We have reached out to Ram Shriram at Sherpalo for his inputs, and will be updating this story after hearing from him.