Fenox Venture Capital has put plans for its India-focused fund on hold after a recently appointed general partner who was hired to lead that fund, Venktesh Shukla, hastily departed the firm.
TechCrunch reached out to Shukla and Fenox partners for information about the abrupt change to its senior investing team.
Shukla did not offer much detail, but in an email to TechCrunch said, “I was initially tempted by the opportunity to work with the fund in India but changed my mind. [I’ve] decided to build my own early-stage fund focused on Silicon Valley innovation.” The investor left Fenox in April, the same month that he was hired.
Shukla’s early-stage fund is called Monta Vista Capital.
In addition to his investing activities, Shukla is the chairman of the nonprofit TiE Global and president of TiE Silicon Valley, organizations that advocate “wealth creation through entrepreneurship,” and provide mentorship, education and networking for dues-paying members.
Fenox Venture Capital’s General Partner and CEO Anis Uzzaman said the firm had begun to raise a new, $40 million to $60 million fund to invest in companies based in India, recognizing the burgeoning market in the region, and an opportunity to have a portion of funds invested there matched by the Indian government.
Uzzaman says Fenox had LPs’ expressed interest in creating this fund, but had not finalized capital commitments or called any capital in April when it hired Shukla as a general partner.
Fenox considers Shukla a “great friend of the firm,” the CEO said, and will aim to co-invest in deals alongside his fund in the future.
Uzzaman chalked up Shukla’s departure from Fenox to a time-management concern. Once things got rolling, Uzzaman said that Shukla and Fenox partners realized he wouldn’t have enough time to fulfill his duties at TiE Global and Monta Vista as well as at their firm.
Fenox aims to recruit or promote another partner to lead its India fund, and expects that fund to close next year, he said.
Founded in 2011, Fenox raises its funds from corporate limited partners only, including its anchor, the automotive components company Fenox Corporation. Among its newer limited partners, Fenox VC lists corporations such as Bandai Namco and Infocom.
The firm does not invest on behalf of wealthy individuals, family offices or endowments. Its portfolio tends to focus on consumer hardware, apps and services and emerging technologies, especially in robotics and artificial intelligence.
To put Fenox’s delayed fund in perspective, venture investors have been talking for years about the potential, but serious risks, of investing in India.
Last month, Social Capital founder and investor Chamath Palihapitya, whose firm intends to invest $1 billion in India-based tech companies, recently told the India Business Times that the region needs “a massive expansion of its middle class,” before startups, and venture investors, can really succeed there.
Investors poured $9 billion into startups in India-based startups in 2015 according to estimates from YourStory.
Venture Intelligence, a provider of private company financial data, reported that 16 venture funded startups in India shut down in 2015. That trend has continued into 2016 at an even more rapid pace. And investments in India have seemingly slowed down over the first three quarters of 2016.
The investment world is watching India to see if startups there that have raised massive rounds of venture capital at high valuations, including Flipkart, Snapdeal, Ola, Housing.com and others, will bring investors great returns.
Update: This post was updated to clarify that Shukla departed Fenox rather quickly after he joined, in April.
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