Cambridge Tech Launches Fund To Invest, Partner With American Startups

Cambridge Technology Enterprises Limited (CTE), a Hyderabad-based, publicly-listed IT services provider, has launched Cambridge Innovations (CI), an investor and technology partner to early-stage US-based start-ups leveraging technologies in the area of cloud and big data.

This move will allow the BSE listed company’s shareholders to de facto invest in the American startup space and will feed back into CTE’s core business by creating a pipeline of clients.

“The convergence of cloud and big data we see as a major opportunity because it is going to create transformative and disruptive businesses. People like Michael Dell feel that this is a $1 trillion market opportunity,” said Aashish Kalra, chairman and director of CTE, “Around this story, we felt that there had to be a better way that we could invest in startups and make them more successful. Because it's not just money you need—you need marketing, you need finance and you need technology, so we are providing two parts of the equation—we are providing financing and we are augmenting the technology team of the company.”

“At the same time, we are reducing risks for our core CTE business where we are trying to provide these services to major corporations. So we can recruit talent, we can retain the talent and learn the latest cutting edge technology by working with the startups and as they succeed they become clients of CTE and at the same time, we hold equity in the business so we can have upside as well,” he said, explaining that rationale behind Cambridge Innovations and how it ultimately tied up with their core business strategy.

The firm offers capital with up to 25 per cent of the seed investment required, a two-year technology plan and a product team to help execute it. According to Kalra, the partnership would also culminate into a faster and better Series A, and solve the problem of a singular focus on the product at the cost of sales and marketing that startups often fall prey to.

Equipped with $3 million, the company plans to invest in 12 startups by March 2017 and build a portfolio of 50 within the next three years. The company has already invested in three startups— Causemo, Authess and RoadZen.

“The best bit is that with CTE being listed in India, Indian investors have the unique access to the best startups in Boston, San Francisco or New York, by simply investing in an Indian company. No one else does that,” Kalra said. He believes that the American market is particularly attractive because of its size, quality of teams and products, realistically low valuations and ultimately, because, with 25 years of experience, CTE knows the space really well which will help in choosing the right startups to invest in.

Klara also said that while the move would indirectly benefit its clients, it would mesh well with the core CTE business which would be looking at natural exit options and would make money on the dilution and buying out of its equity, and would give its employees exposure and training in the latest technology.