Wipro Ventures invests in Israeli venture capital firm TLV Partners


Bengauluru: Wipro Ventures, the $100 million corporate venture arm of India’s third largest software services exporter Wipro Ltd, has invested an undisclosed sum in Israel-based TLV Partners. The deal marks its first investment in a venture capital firm.

Larger rival Infosys Ltd made a similar move by investing an undisclosed sum in Palo Alto-based Vertex Ventures last year to boost access to start-ups focused on disruptive technologies.

Wipro Ventures is overseen by Rishad Premji, the son of Wipro’s billionaire chairman Azim Premji. So far, it has taken minority stakes in four US-based start-ups and one Pune-based start-up.

The deal with TLV Partners will let Wipro access newer technologies from more start-ups and help it cater better to clients ranging from Citigroup Inc. to Exxon Mobil Corp., when it comes to offering services in the areas of enterprise software and security. “The areas of engagement are enterprise software and security. We engage with these companies based on the level of maturity of the solution and the specific needs of our clients,” a Wipro spokesman said.

The company declined to share more details, including the amount of investment.

Mint learns that Wipro Ventures put in less than $5 million in TLV Partners’ debut fund (which raised $115 million from investors) in the fourth quarter of the last financial year.

Wipro’s investment in TLV Partners is in line with the management’s objective of building a strong cyber security solutions practice; it’s the third investment in the area of security.

The corporate venture arm has made minority investments in cyber security-focused start-up Vectra Networks and Arizona-based fraud prevention solutions start-up Emailage Corp.

Wipro and Infosys are looking to hedge their bets by investing in venture capital firms, in addition to taking direct stakes, as this helps them gain access to technologies of a host of start-ups.

“Having your own ventures team is important, but adding a mix gives you the opportunity to try different approaches and gives you broader exposure to a new investment hypothesis,” said Ray Wang, founder of Constellation Research, a technology research and advisory firm.

Tel Aviv-based TLV Partners was set up by Eitan Bek and Rona Segev in July last year with an initial corpus of $50 million. Both Bek and Segev were partners at another Israeli VC firm, Pitango Venture Capital, before setting up TLV Partners.

TLV Partners has already made investments in three firms, according to an executive familiar with the development who requested anonymity.

An email sent to Segev of TLV Partners seeking comment on Thursday went unanswered.

“As we try to broaden our reach in the start-up ecosystem, it’s impossible for any one individual or team to evaluate the most promising start-ups. So it’s only logical that we also look to invest/partner with some early-stage venture capital funds,” a Wipro executive said last year. Mint first reported on Wipro’s plan to invest in venture capital firms on 7 October.

Over the past few years, the traditional approach followed by the large companies in India’s $146 billion outsourcing industry has come under pressure.

Newer technologies such as automation and cloud computing offer a cheaper and more efficient alternative to the historical model of using an army of engineers to oversee technology work, making IT maintenance work commoditized.

To retain their dominance in the outsourcing space, IT vendors are picking stakes in small start-ups focused on disruptive technologies, including artificial intelligence and cloud computing, which they can then take to their clients.

In addition to its investment in TLV Partners, Wipro Ventures spent $20 million last year in picking up stakes in five start-ups. These include investments of undisclosed amounts in San Francisco-based artificial intelligence start-up Vicarious, Vectra Networks, Emailage Corp. and California-based analytics start-up Talena Inc. as well as Rs.9.78 crore in Pune-based big data start-up Altizon Systems Pvt. Ltd.

Since the corporate venture arm was formalized only last year, Wipro does not count its $30 million investment in Opera Solutions, a New-Jersey based data analytics company, and its investment of $5 million in cloud solutions Drivestream Inc., as part of Wipro Ventures’ portfolio.

Infosys, under its chief executive, Vishal Sikka, has invested in seven start-ups and one venture capital firm, and has spent more than $30 million of its $500 million Infosys Innovation Fund over the last 18 months.

Wipro, over the last 12 months, has also spent $760 million in buying four companies, which, together, have $371.5 million in revenue, as its CEO Abidali Z. Neemuchwala looks to revive the fortunes of the Bengaluru-based software exporter.

Wipro Ventures’ $100 million fund is jointly managed by Venu Pemmaraju, formerly a senior investment manager at Intel Capital, and Wipro executive Biplab Adhya. Both Pemmaraju and Adhya are based out of California and report to Rishad Premji.