Smile Group has created a joint venture with TPG Growth called Katalyzers to help companies from developed markets launch their products in developing markets. We spoke with Harish Bahl, who is the founder of Smile Group and General Partner in Katalyzer to know more about the new venture, how they plan to approach these markets and the relationship it shares with TPG.
Medianama: What are you going to do with $100 million funding?
Harish Bahl: First of all this is not a VC fund. This is an operating company that has been founded by Smile Group. It’s basically similar to what we have been doing in India, which is building a platform for fast growing startups in valley and other developed markets, so they can easily launch in developing markets. It is an extension of what we have been doing.
We tied-up with TPG because it provides lot more access to capital, so if need we have access to capital to expand business. Broadly our mission is to help these companies launch in emerging markets and not to structure deals in any particular way.
Medianama: So you’ll take a stake in these companies?
Harish Bahl: These could be regional joint ventures or we could be stake holders in the region as well. We are always a partner and not a services company.
Medianama: What is TPG’s role in the JV? Why TPG, why not your other partners like Ru.net?
Harish Bahl: TPG is probably best and largest in the world so a tie-up with them was a no-brainer. They have a reputation in Silicon Valley and most of the companies we are looking to partner with are in US or in the valley; TPG is familiar with them. We are not talking to very early-stage companies and the typical deal cheque size will be bigger, so you need a partner who can match up the need to the business.
RU-net is a close partner and they have invested in several of our companies. We still have a good relationship with them.
Medianama: Are you talking of helping Indian companies launch their business in other markets or only western companies? Why?
Harish Bahl: We are not looking only at Silicon Valley companies. We will help all companies that have good business models and want to expand to emerging markets.
Medianama: When you say emerging markets, which all countries are you looking at; where and why?
Harish Bahl: We are focusing on Asia Pacific, Middle East and Africa as of now. We will look at Latin America and Eastern Europe later.
Medianama: What has been your experience in Africa? What are you planning to do there?
Harish Bahl: It’s the next big frontier. Sure, it is a tough market where political system is depressed. But if you’re really looking at next big frontier, you can’t ignore Africa as of now. Companies that don’t have to set up too much on-ground infrastructure are interested in the market; companies that are on mobile Internet space or rely on e-delivery mechanism are looking at Africa. These companies are more prone to succeed there.
Medianama: Why is South East Asia of interest to you? How is it different from Africa for your business, and where does competition lie?
Harish Bahl: Three billion mobile users are there in SE Asia so that’s the answer. It’s twice the size of Europe if you look at all the numbers — number of consumers, Internet subscribers, mobile subscribers. So if you compare the market potential of Europe and South East Asia you get the answer.
Medianama: Will Katalyzer partner with local companies for launches or will you do greenfield companies?
Harish Bahl: We will work with any company that is on a high growth path and needs a partner to take them international, especially in emerging markets. We will have offices and infrastructure and very operational.
Medianama: How will the partnerships with GroupM and SCG be extended?
Harish Bahl: These are the market leaders in whatever they do and have ready access to knowledge, talent and all key insights. We will follow the same relationship we have with them in India in other markets too.
Medianama: What happens to Springstar?
Harish Bahl: Now we may work with Springstar on a deal to deal basis. But Springstar is more focussed on Europe. Katalyzer meanwhile has a lot more operating infrastructure in terms of media, tech, offices, people on ground and capital. From a focus perspective the difference is the markets they operate in.
Medianama: Any plans to bring Springstar under Katalyzers in the long term?
Harish Bahl: We have no such plans.