Investment billionaire Ambani sets his sights on Israel in quest for startups

Billionaire Mukesh Ambani is scouting for startups that may dovetail with his own plans for e-commerce and phone services in India. For that, he is willing to look as far as Israel and Silicon Valley in the United States.

GenNext Ventures, owned by his Reliance Industries Ltd, is talking to other venture capital firms and private equity investors in those countries and in the United Kingdom to pick out candidates, Managing Partner Vivek Rai Gupta said in an interview. The selected startups could use Reliance's network to gain access to a market that is now the biggest for Facebook Inc after the US.

"It can be a two-way street," said Gupta, who used to head the India operations of consulting firm A.T. Kearney until 2008. "It gives them an opportunity to come to a big market like India and for us, it is an opportunity to interface with the best new ideas from that country."

Startups are the latest in Ambani's game plan as he readies his $13.6 billion high-speed fourth-generation phone network across India, where Morgan Stanley predicts e-commerce sales will surge tenfold to $100 billion by 2020. GenNext, backed by the refining-to-retail conglomerate, is an "evergreen fund that will invest opportunistically", Gupta said.

"Big corporates can benefit from mentoring and supporting" startups, said Kalpana Jain, Deloitte India's New Delhi-based senior director, adding they could take advantage of "synergies".

Innovation hub

The Mumbai-based venture capital firm has mentored 11 local fledgling businesses at its accelerator GenNext Innovation Hub, a joint program by Reliance and Microsoft Ventures. It hasn't yet invested in any of these.

While GenNext provides the office infrastructure and brings in industry experts to guide the startups, Microsoft brings in the rigor of running such a program, said Kattayil Rajinish Menon, Bengaluru-based director for startups at Microsoft Corp India, which also runs a separate accelerator in the city formerly known as Bangalore.

"We are following the seed-to-fruit approach," said Raghunath A. Mashelkar, GenNext's chairman and Reliance's board member. "We will hand-hold them all the way."

The first batch of startups includes LogiNext Solutions, which helps track rail cargoes, trucks and couriers boys, and spot delivery bottlenecks. Coitor IT Tech offers a virtual changing room where customers can try on clothes on a computer screen. Others include a predictive health care analytics company called Health Vectors, connected car platform CarIQ and a passenger safety platform AxleRate.

GenNext is already inviting applications for its second batch starting in June. There would be greater focus on helping firms secure investments next time, Menon said.

Private equity and venture capital funding in Indian Internet firms rose almost sixfold in 2014 from a year earlier, according to a Feb 2 Morgan Stanley report. Investors have poured in $4.5 billion since January 2014 in this sector, it said, with e-commerce firms cornering 70 percent of the infusions, followed by classifieds, travel and taxicab services.