Why Helion bets on enterprise software and mobility?

Venture firm Helion Advisors which operates a $605-million fund has sharpened its focus on enterprise software over the last two years. The strongest focus of the fund is on mobility and enterprise and it is aiming to making six to 10 investments in these two areas.

Last year, the fund pumped in $6 million in security software company Seclore. Since January this year, it has invested in three companies - an undisclosed amount in Linguanext, which enables enterprise applications to be localised in multiple languages, $8 million in enterprise-payment solution company Ezetap and $4.2 million in mobility solutions company RapidValue. The fund expects all these investee companies to grow fast henceforth. "They should cross at least Rs 100 crore in revenues in the next three years," says Rahul Chandra, co-Founder and Managing Director at Helion Partners.

Last year, the fund roped in Alok Goyal, the former Chief Operating Officer of SAP India to head enterprise software initiatives.

For Helion,  the focus on these two sectors might be very timely. The enterprise software scene is changing in India, not only in terms of number of companies offering such solutions but also companies acquiring scale. Helion alone has screened more than 200 companies in the last two years.

Also, earlier while large companies like HDFC Bank or Asian Paints were not willing to take bets on products from Indian start-ups, are now more open to buying their products.  "Earlier than that, the domestic market was small," says Chandra. "There were two roadblocks. Firstly, enterprise budgets were restricted and most of their spend was limited to software from global companies like Oracle and SAP.  So there was little money to support domestic software companies."  
 
Indian companies are becoming more open to trying out new and unproven technologies than before, which is encouraging for start-ups in India. "This is encouraging because large companies have the infrastructure to try and test out complicated products, which provides a platform for young software companies to refine their proposition," says Chandra."They have the ability to pay." Problem sets are now getting narrower so you that new companies can be solving a specific set of problems.  

So what is Helion's criteria for picking enterprise companies? From the fund's four investments so far, it is clear that these are not very early stage companies. Rapid Value, for instance has been around for four years. "These are companies that have identified, sold and delivered to customers. Renewal of the software license by customers is a great plus for us. Plus, companies that offer easy and simple adoption are attractive to us," says Chandra. "One advantage Indian companies have over their Western counterparts is because costs like technology talent are much lower here than in advanced markets, so companies here can take longer time to develop software that is much more easily adoptable, and that is a great competitive edge. A lot of companies in the West ignore a problem which needs more time and effort," says Chandra, hinting at security software company Seclore.

Over and above all factors, Helion is looking for companies with a cross-border play. That essentially means that the product architecture should have the ability to solve problems for the US-based customer as well.

However, there will be challenges as far as spreading wings in the market is concerned. There are problems unique to India, such as longer collection cycles from Indian customers. Here in India you ahve to worry about price-points. The online discovery, sales and adoption of software that works well in markets elsewhere, does not work much in India. "Selling in as much as an innovation in software as the software itself," says Chandra.