1Mby1M Virtual Accelerator Investor Forum: With Naganand Doraswamy, Managing Partner and Founder at Ideaspring Capital (Part 1)

Naganand Doraswamy, Managing Partner and Founder at Ideaspring Capital, adds to our thesis on great investment opportunities within the sub $100 million exit space.

Sramana Mitra: Let’s start by having you introduce yourself as well as Ideaspring.

Naganand Doraswamy: I grew up in Bangalore. I did my undergrad there and then came to the US in 1999 to do my Masters in Virginia Tech. After my Master’s, I moved up to Boston. I joined FTP Software where I wrote the first implementation of IP security of Windows 95.

Then I was with Bay Networks where I was working in the architecture lab working on the next generation of internet architectures. We also developed the core router for Bay Networks. Then my startup journey started. In 1999, I was a founding member of a startup that was building a 1.6 terabit long-haul optical transmission system.

Sramana Mitra: Which one was that?

Naganand Doraswamy: That was PhotonEx. It was a lot of fun. We had 15 PhD’s from MIT working on the optics side and a bunch of us working on the engineering side. It was a great learning experience. We got the product in the market. Unfortunately in 2003, the entire telecom market imploded. We had to close the company down. I tried to do one more startup in the fixed mobile convergence space. Funding was hard. Tried it for a year but couldn’t raise money.

Then I moved back to India in 2005. We had our own company where we were doing a lot of product development. Fortunately, there was an inbound inquiry from a Norwegian company. We sold some part of the company in 2007 and the rest in 2012. We exited that successfully. I was trying to figure out what to do next because I still had two years post-acquisition.

As you know, the Indian startup market is very attractive. One of the things I realized that didn’t exist is there were no investors who’d invest in early-stage product innovation companies. A lot of companies that were getting funding were B2C, but not many funds are looking at early-stage enterprise companies. My background was all enterprise. I also had this policy that money without mentoring or mentoring without money is useless. You need to give money and help entrepreneurs at this stage.

Having been an entrepreneur for nearly 20 years, I thought that was the best thing I could do. We don’t do more than five companies a year. We are very clear. We don’t want to take any operational role. We are available to help them and mentor them. We started a small fund. It’s been a great journey. I invested in 16 companies in fund one. Fund one was $20 million. We’re looking at doing $35 million for fund two.

Sramana Mitra: All in India?

Naganand Doraswamy: The preference is India. In fund one, we invested in a couple of Valley-based startups. The reason we did that was, we found a couple of partners who were working very closely with entrepreneurs. All those guys had an Indian operation. The reason we don’t like to invest in companies outside of India is with the stage we come in, you got to be close to the founders. If you invest in a company in the US, you can’t add a lot of value that way.

This segment is part 1 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Naganand Doraswamy, Managing Partner and Founder at Ideaspring Capital
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