IDG Ventures India, a regional corporate venturing unit of US-based publisher International Data Group, said its study of investments in India showed 51 technology deals realised an average of 5.6 times investors’ money.
By comparison 63 non-technology sector portfolio companies of venture capitalists made 3.3 times their money, according to Sudhir Sethi, managing director of IDG Ventures India, in a tweet.
IDG said 51 of the 114 reported sales of investments between 2004 and 2009 were of tech firms, with trade sales offering the best outcome for investors. Fifteen of the 114 deals were floated on stock exchanges.
As a result, Indian technology companies, such as Mphasis and Cognizant, are increasingly trying to incubate business ideas generated by employees or invest in third-parties, according to news provider VCCircle.
Ganesh Ayyar, chief executive of Mphasis, told VCCircle: "We are looking to develop mini-CEOs who have the flexibility and freedom to grow the business. The plan is to integrate them into the company at a later stage."
Cognizant calls its incubation model, Cognizant Capital, and it helped lead to the Cognizant 2.0 knowledge management and internet platform. "We have spent over 1000-person years in building and managing this platform, which would translate to well over $10 million of spend on it," said Sukumar Rajagopal, global head of innovation at Cognizant, to VCCircle.
Infosys Technologies has incubated companies, such as On-Mobile, in the past, and has started a structure where vertical heads would mentor employees with investable ideas and is about to launch a corporate venturing fund for third-parties, VCCircle added.
Subhash Dhar heads business innovation at Infosys.