Persistent Systems mulling investment in 2-3 start-ups

Company reported a cash and cash equivalent of Rs 594 crore for the period ended December 31, 2013

Software services firm Persistent Systems is likely to invest in 2-3 product-based start-ups, including an emerging one in India, over the next two months.

The Pune-based firm has started a VC fund, Persistent Venture Fund, which is an early-stage investment fund focusing on innovation in Social, Mobile, Analytics and Cloud (SMAC).

"We are in talks with several start-ups, and this quarter may invest is 2-3 firms, which could include one from India," Persistent Systems Chairman & CEO Anand Deshpande told PTI.

The firm has not created any special fund for investments and it is managed from internal resources of the company.

Persistent reported a cash and cash equivalent of Rs 594 crore for the period ended December 31, 2013.

Deshpande, however, said talks take time and all the aspects, including financial viability and technological future will be considered before investing in start-ups.

"We are in initial stages (of talks) with some firms and in advanced with some others, so it is not necessary that the investment materialises during the quarter. The time period can extend. But, we do intend to keep up our effort," he said.

On the amount of investments, Deshpande said the maximum funding that the VC fund gives is USD 250,000.

He also said the firm is a strategic investor and not a financial one.

"We consider two aspects for selection. First is the technology area of the start-up and its similarity to our interests, and second the customers that it needs to align with our customer eco-system," he added.

Persistent Systems CFO Rohit Kamat said the company is usually looking at product development start-ups in the US as the eco-system is very advanced in that country and venture funds do not face problems in investing.

"Ours is a kind of seed fund. We do not participate in the management. In India, we do face some problems in terms of the management bandwidth and the firm's ability in the future to adapt to the technology challenges vis-a-vis the market," he added.

In the December quarter, the VC fund invested in two US companies Ustyme and DxNow.

In Ustyme, Persistent invested USD 250,000, while in DxNow, it has so far infused USD 125,000 and can further invest a similar amount in the near future.

Ustyme is a free video-call app for iPad that creates shared experiences through quality content like books and games, while, DxNow is a life sciences firm that uses advanced microfluidic and imaging technologies for point-of-care diagnostic solutions.

Persistent reported a 30% rise in consolidated net profit at Rs 64.20 crore for the quarter ended December 31, 2013, against Rs 49.51 crore in the year-ago period.

Its revenues rose 30% to Rs 432.76 crore from Rs 332.99 crore during the quarter under review.