Persistent gets $18.8 million VC funding

Persistent Systems, an outsourced software product development company, on Tuesday announced the closing of $18.8 million investment by two venture capital (VC) funds.

Anand Deshpande, chairman and managing director, Persistent Systems, said, "We have received $18.8 million from two venture capital firms, Norwest Venture Partners (NVP) and Gabriel Venture Partners, who have invested $13.8 million and $5 million, respectively."

Refusing to divulge the stake held by the VCs in the company, Deshapande only said, "With this investment, Pramod Haque, managing partner of NVP and Navin Chaddha, general partner of Gabriel Venture Partners, have joined Persistent's board." Growing at 70 per cent over the last few years, Persistent has been a profitable company.

Deshpande said, "Currently, product companies outsource about 25 per cent of their work and it will increase. As per official estimates, outsourced product development is a $3-billion market growing at 30 per cent per annum and will be $8-11 billion market by 2008. With experienced VCs on the board, we will be in a position to learn from them and exploit this opportunity."

Detailing the expenditure plans, he said, "The funding will be used for enhancing the US front-end operations and investment in technical R&D."

Present at the press briefing virtually via video conferencing, Haque, a pioneer venture capitalist who has funded more than 350 companies, said, "Persistent qualified for the funding as it works in a market space which has a huge market opportunity, has a sizeable revenue base, proven business model and is a profitable company. It is ready for its next phase of growth planning an initial public offering."

Speaking of his role on the board of directors, he said that he would be introducing Persistent to Fortune 500 companies as the company looks for ways to grow and form strategic alliances.

Also present via teleconferencing was Chaddha, who mentioned that his role would be that of a mentor and a coach as the company plans for an IPO.

"I will take a hands on role to work with the management team to decide upon various aspects such as market entry, positioning, executive reporting, getting strategic advisors on the board and providing board leadership, as we plan for an IPO," he said.