After returning to Bangalore, I went to attend with excitement yesterday’s TiE-event with Patrick J. McGovern, founder and CEO of the worldwide IDG-Group.
It was quite funny to meet the gentleman as IDG is for me personally a special household name. In my first employment after graduation as an assistant to the publisher at the vmm verlag in Augsburg, which used to be part of the Vogel Media Group (”Chip”), we always looked with respect and awe at the competition of the huge and powerful IDG-Group. And yesterday Patrick explained how it all started at his young age as an technical editor at MIT, how he landed his first project by getting $270 k from 9 clients which actually was the first and only external capital IDG has taken ever since. Unassuming in his ways, and expectedly a very articulate speaker, he outlined the further growth of IDG also thanks to its carefully nurtured corporate culture, its early internationalization strategy, particularly the entry into the Chinese market. Today, IDG boasts 26 trade- and 15 consumer publications there amounting to an annual turnover of US-$ 80mn with a profit of $29 mn. It felt a bit that in a charming way he intended to create some peer-pressure on his Indian audience to show that what can be done in China, can be done in India, too.
Especially, when he went to describe how successful IDG has been with its venture capital fund in China with $550 mn under management and 25 professionals in 5 cities. Its track record is absolutely stunning with an average IRR of 47 % over the last years.
Mr. McGovern would not be Mr. McGovern if he had not brought with him a clear entrepreneurial message for the Indian market: “We will launch a $150 mn venture fund in India in technology related investments. And I would like to invite you entrepreneurs here to send me me your business proposals if you are having some exciting ventures at hand.” I asked Patrick if he could specify what exactly he meant by “technology related investments.” He explained that the investments would range in these major fields:
- Value Added Services for mobile, network and IT-infrastructure
- Enterprise Software
- Internet and E-Commerce (where IDG has been hugely successful in China)
- on the sideline: biotech investments
Overall he said: “We will proceed on an opportunistic basis in the A-funding round, but first and foremost answer the key question: ‘Are the people from the investee company good people?’” At this stage IDG will provide the liquid assets for the fund fully from internal sources, but might open at a later stage for external limited investors.
The Indian VC environment is definitely heating up. The big bang, also an entire novelty in the VC market, was effectively Sequoia Capital’s take-over of Westbridge Capital. From inside sources I got to know the rationale contained both a defensive and an offensive stragegy. Defensive in the sense, than India-focused Westbridge had observed that increasingly huge US-funds were entering India where it might be difficult to compete with. Offensive in the sense, that Westbridge can now focus fully on looking at suitable investments and govern them to value addition till the exit without using resources for the fund raising itself. For that part, Sequoia has more than enough in its war chest. Like my (undisclosed) source mentioned: “They are so reputed that they are rather into fund-rejection” ;-)
Overall for IDG certainly the right time to move into the Indian market, especially given its proven success story in such ventures from China. Patrick outlined that the initial set-up would consist of 4 general partners and 8 support staff and they were just in the phase of hiring and putting the team together.
One participant in the room asked where Patrick had his constant energy and drive to still run his business in such an active manner. I really liked the authenticity of his response: “I really love what I am doing. And there is so much still ahead. IDG is now in 85 countries, and the United Nations has acknowledged 190. So you see that there is still some way to go.”
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