Pai has direct and indirect investments in about a dozen companies.
Mohandas Pai is a man with strong convictions. When he says cyber security is the next big wave in the start-up world, you tend to agree.
As e-commerce adoption gathers momentum, there will be a growing need for companies to keep data safe.
It is with this conviction that he infused $2 million into Uniken, a cyber security start-up based in Pune, through his technology fund Exfinity Ventures.
Pai, former chief financial officer of Infosys, is known as an outspoken social commentator, while Pai the angel investor has slipped under the radar.
Pai has direct and indirect investments in about a dozen companies. He heads Aarin Capital with Ranjan Pai, while also having a stake in five other funds spread across sectors.
"It's a conscious choice to have separate funds in different segments of the start-up universe. We want to establish a network," said Pai.
He believes even $50,000 goes a long way in India, which is why he makes relatively small investments. "We are opportunistic investors. We'll invest $1-2 million but only in companies that have technology at its core," he said.
Investments
Pai participated in a $8 million Series-A funding of ZoomCar in October 2014, along with Sequoia Capital, Funders Club and Empire Angels. Over the past year, the company has raised $21 million and is second in the self-drive rental car market segment.
The crown jewel of Pai's pledges is YourStory. The Bengaluru-based company drew a lot of attention when Ratan Tata's investment in it came to light. The website profiles entrepreneurs and start-ups.
But, in a world where media companies are struggling to stay in the black, it begs the question: Why there? "News organisations write for old people. They will stop reading in 10 years. YourStory writes for the young. Their audience will keep reading for another 25 years and when digital marketing comes to the fore in five-six years, YourStory will find its feet," said Pai.
These are only some of his personal investments, Aarin Capital's portfolio tells you what he finds exciting. "Biosciences is a big focus at Aarin. It is rewarding in the long term when solutions are found," said Pai.
An interesting investment in the Aarin portfolio is Homelane, an interior design start-up. Aarin and Sequoia put in $4.5 million in January, followed by Sequoia investing another $50 million in June. "In the next five-six years (most investments) will start coming together," he added.
Potential exits
Five years is a key number for Pai. Companies will begin to mature and that's when he hopes to start making exits. He puts ZoomCar, YourStory and Ressy, a deal-finding app, on that list. How does he choose his winners?
"He tries to find the spirit of Infosys in these companies. If they have focus and willingness to grow organically, he will give them the money," said the co-founder of a company that failed to raise funds from Pai.
Though he follows a strict hands-off approach, his directness during board meetings enhances the legend. "His pragmatism is refreshing. He isn't someone who will force his will on the entrepreneur but he doesn't mince his words either," said Greg Moran, co-founder, ZoomCar. Others outside the Pai system, too, acknowledge how strong Pai's portfolio has started to look.
"He is certainly not part of the herd. His focus on new-age sectors is evident," said K Ganesh, serial entrepreneur and former CEO of Tutorvista.
It isn't only tech companies that drive Pai. He is also a fund investor in Unitus Seed Fund, which invests in solving bottom of the pyramid problems by empowering entrepreneurs. "I have been part of a company, which was a start-up and had technology at its core. When I can identify with the passion that's when investment happens," said Pai.
But, there have been a few misses as well. "Twice, things did not work out. Let's just say we were happy to cut our losses," he added. Both companies, he said, downed shutters.
These sour experiences haven't deterred him from making further investments. Exfinity Fund was part of the round that raised $1.5 million in January for Mad Street Den, which develops artificial intelligence that can be incorporated, for now, into shopping apps.
"They are the first in India to use this technology. It was high-risk but the results are starting to show. Others will come in but we are glad we got there with Mad Street Den first," he said.
