They made billions outsourcing, now they’re investing in India’s new age tech startups

India’s IT honchos made their billions from the IT services and outsourcing boom of the nineties and naughties. Now they’re investing in the new generation of entrepreneurs. The latest is a new fund for early stage startups called Ideaspring.

Arihant Patni is managing director of Ideaspring and and his elder brother, Amit Patni, is general partner. They are the scions of Gajendra Patni, who co-founded Patni Computer Systems (PCS) along with his brothers. This pioneering Indian IT services company was sold to iGate in 2011 for nearly US$1.5 billion.

Ideaspring’s CEO is Naganand Doraswamy, who is also the president of TiE Bangalore. The new fund’s anchor investor is Mohandas Pai, former CFO of IT services bellwether Infosys. Interestingly, the seven co-founders of Infosys were techie colleagues at Patni, which they left to form Infosys in the early eighties. There was some acrimony then, but bygones are bygones.

Today, the success of these IT giants – from PCS and TCS to Infosys and Wipro – forms the bedrock on which India’s startup ecosystem is founded. They’re a fountainhead of tech talent, multi-national experience, mentorship, and, of course, funds.

See: India’s startups stand on the shoulders of these giants, and now there’s an app to reach them

Focus on AI, AR/VR, and other new age tech

Photo credit: Pixabay.

The focus of Ideaspring is particularly interesting. It aims to back startups in new age technologies such as Internet of Things (IoT), machine learning, big data analytics, artificial intelligence, computer vision, augmented and virtual reality (AR and VR), and internet security.

This a big departure from the era of IT services and outsourcing which earned India the moniker of back office of the world. It’s also a new trend in India’s startup scene, after the ecommerce funding highs of 2014 and 2015.

Instead of mega funding rounds, we now hear of devaluations and layoffs in ecommerce and delivery, the latest being the shutdown of PepperTap, which had raised over US$50 million in funding.

The downturn in the B2C (business-to-consumer) space coincides with an uptick in B2B (business-to-business) startups. They may never reach the dizzying hyper growth of ecommerce, but they’re world class and profitable. A joint report by Google and Accel recently projected Indian SaaS (software-as-a-service) startups quadrupling their revenue from US$600 million last year to US$2.5 billion in 2020, and again quadrupling that to US$10 billion by 2025 on the back of global demand for Indian SaaS.

See: 5 reasons why Indian SaaS startups will rock on the world stage

The idea behind Ideaspring

Fenox, Target, and now Ideaspring