Mayfield invests in Indian incubator AngelPrime

Does not disclose exact amount, but says overall fund run by AngelPrime will total less than $10 mn

One of Silicon Valley's most established venture funds is seeking to ferret out startup talent in India at the very earliest stages by investing in AngelPrime, a Bangalore-based incubator programme to foster young companies.

The Mayfield Fund said it would take a majority investment in AngelPrime, bringing its India investment expertise to younger companies, and more technology companies, than in the past. It did not disclose the exact amount, but said the overall fund run by AngelPrime would total less than $10 million.

With the investment, Mayfield can foster early-stage technology in India, while keeping an eye on the start-up scene there, said managing director Navin Chaddha.

The fund will also be able to work with entrepreneurs it knows well. AngelPrime's founding partners are Bala Parthasarathy, Shripati Acharya and Sanjay Swamy, three of the co-founders of online photo company Snapfish, a former Mayfield portfolio company bought by Hewlett Packard in 2005.

The partners will act as co-founders in the companies they support, Chaddha said, and will take larger stakes than most incubators, though he did not say how large. In the United States incubators generally take stakes ranging from about 6 percent to 10 percent.

AngelPrime provides seed capital in the $200,000-$600,000 range to about three companies a year and aims to nurture them for about 12-18 months. By contrast, the well-known U.S. incubator Y Combinator invests about $18,000 per company, and its program runs three months. Its last class numbered more than 80 startups.

Many venture firms are establishing relationships with U.S. incubators. Andreessen Horowitz and General Catalyst, for example, are among those offering each Y Combinator company a total of $150,000 in convertible debt via the Start Fund.

"From a strategic perspective, it is a similar thing to what Andreessen Horowitz has done," said Chaddha, comparing the benefits of Mayfield's AngelPrime investment with Andreessen's relationship with Y Combinator.

India has long held promise for venture capitalists, with many comparing it to China in the 1990s when it comes to new companies. It has a few incubators, but none has yet achieved the type of traction programs such as Y Combinator have in the United States.

Mayfield currently invests in India through a dedicated $111 million fund for companies that are already generating revenue. In July, it announced Mayfield XIV, a $365 million U.S.-focused technology fund.