Cybersecurity investments set to take off in India: Bessemer’s Vishal Gupta

The segment has been “fertile” for Bessemer globally, where the VC has made over 30 investments. It is now starting to mature in India in terms of scale, enough for Bessemer to launch a roadmap for it, said Vishal Gupta, partner at Bessemer Venture Partners, in an interview with Mint.

Bessemer invests in companies based on their investment “roadmaps,” which are the company’s investment outlook or thesis in a segment. Its longest-running roadmap has been in consumer internet, where it has invested in Indian startups such as Swiggy (which it has since spun off), Bharat Matrimony, Snapdeal, BigBasket and Urban Company, among others. Its other roadmaps in India include fintech, healthtech and software as a service (SaaS).

Roadmaps for success

“Cybersecurity has been fertile ground for us globally – we’ve invested in over 30 companies,” he said, adding that one of the leading companies in this space, VeriSign, was incubated in the Bessemer office.

“The issue of cybersecurity has been around for 50 years, but a roadmap always tries to answer the question: when will it take off? We think from the Indian ecosystem perspective, the timing seems good as the data protection act has been passed and regulations are on the way. The fact that a lot of frauds are happening in mobile transactions, lending and insurance is the time when a lot of these ecosystems are emerging and the market is big enough (for investments),” he said.

The VC has evaluated several investments in this space but has not yet closed any deals. Other new roadmaps it is looking to develop include D2C (Direct to Consumer) and health insurance technology, he said.

Gupta began his career as executive assistant to the chief executive of HCL Technologies, spent several years building the private equity division of Reliance Capital (backed by Anil Ambani), before joining Bessemer in 2006 to open its India office. The firm initially invested in large-scale companies seeking growth capital, long before “venture” investing became mainstream in India, he says.

But it has since evolved and now issues seed money checks, Series B or C ($5 million to $50 million). Through Bessemer’s Century Fund, it can also consider larger investments.

Platform strategy

Not all roadmaps turn into investments, he said. In addition to roadmaps, one of the company’s successful strategies has been “platforms,” Gupta said.

“One of the themes I love is the platform play. All the deals I’ve done in the fintech and software space (like Lentra or Perfios) are platform plays,” he said, describing it as a “picks and shovels strategy, where the investor bets on the company that enables the manufacturers, rather than the manufacturers themselves.” This strategy allowed Gupta to make investments in the fintech and insurtech segments, without taking on the credit risk of a fintech lender or an insurance company, he added.

“As the saying goes, when there’s a gold rush, it’s better to sell shovels than dig for gold yourself, because you may or may not find it,” he added.

Many of the companies in its portfolio, invested in through these themes, are now large enough to be listed on the stock exchange.

“We have a long list of companies that can go public,” Gupta said, although he declined to name them.

Nine of its portfolio companies have gone public in recent years, starting with Motilal Oswal, Indian Energy Exchange, Home First Finance Co., IL&FS Transportation Networks (ITNL) and others like Medi Assist and Bharat Matrimony.