This venture capitalist does not believe Amazon is the model India needs. Here's why

In April 2014, when Sherpalo Ventures pulled out of India to focus on the US market. Sandeep Murthy, then a partner at Sherpalo, was not yet done with India and wanted to be a part of the great Indian startup story.

With his earlier investments since 2005, he launched Lightbox Fund with six business portfolios which he bought out of Sherpalo Ventures. Lightbox also started a second fund to work with consumer technology companies.

In an interview with Firstbiz_, he talks about Lightbox and how he plans to foster early-stage start ups._

How long have you been investing in Indian startups?

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I have been investing in India since the last nine years. I would basically look at investing in businesses or opportunities which would be valuable over time to invest in and grow. Over the last nine years, we have invested in a variety of companies like ClearTrip, InfoEdge, InMobi, etc. I realised that there is a great opportunity to really build our own investment firm with a different approach from the industry, with a very hands-on operational approach. A couple of months ago we invested in MapMyIndia, GreenDust, ZoomIn, etc, which we thought in the coming years will add a lot of value.

You have floated a second fund, Lightbox 2. How do you plan to position these two funds?

Over the next six years, the market in India is going to be very exciting. So, we started thinking about how to position ourselves in those circumstances. The companies that we invested in the first Lightbox fund are the companies in which I have been investing since 2005. In March this year, I took over all my six investments when I exited Sherpalo ventures.

Through our second fund which is a $90 million fund, we will invest in early-stage businesses. Our approach is not to give the business a little bit of seed capital. If we like the idea, we can align with them and we plan to invest anywhere between $3-$5 million. Then, we would accept responsibility to work with the entrepreneur to build the company. We would also get operationally engaged in the business. We have raised $25 million in this manner and made a good investment in a startup. Imbibe.

What is it that you are looking for in businesses for Lightbox 2?

We are looking at those businesses that have technology and data as their core model. It should have some ability to drive customer value and leverage these two aspects. I would also like the entrepreneur to be customer-oriented. I believe it is easier to sell in the consumer segment as they are independent decision makers. We would also like to focus on companies who have the ability to grow globally. Some of our companies in our first investment have already done this.

How do you see the promising online vertical e-commerce?

We have had a lot of discussion on e-commerce lately: reasons why a deal makes sense; we also question why it didn’t make sense. We have built a profitable e-commerce company, GreenDust. Though, GreenDust is not specifically e-commerce, I think that you have to look at e-retail differently in India. We started off as an Amazon model. But does India need an Amazon, and is Amazon model the right model for India? I don’t think the Amazon approach is the right model to build a successful e-commerce company in India. Amazon struggles to make money in its home market and in India I don’t think any of these guys are able to say they are making profit. Though we are seeing good indications of that in the industry now.