Sep 29 2009
It’s been over year since the financial markets started to collapse and since then we are seeing many deals that might make you scratch your head. The one that comes to mind is Sequoia Capital investing into low incoming housing in Bombay.
Sequoia Capital is one of the oldest and most well connected venture capital firms in the world, they have invested in companies like Atari, Cisco, Google, LinkedIn and PayPal to name a few. It was started by Don Valentine who had the balls to invest in Cisco Systems back in December 1987, which was just weeks AFTER the October 1987 stock market crash.
Back to the low income housing project. Sequoia Capital is investing in Tata Housing which has a project outside of Bombay in Boisar. The flats will most likely sell for between USD 8,000 to 10,000. So why would Sequoia get involved? I’m betting there are a couple reasons:
1. Sequoia Capital is first and foremost a technology VC firm and unfortunately the number of technology deals that are in play in India is a fraction of what they see on a global scale. Which means instead of funding entrepreneurs they have to be entrepreneurial themselves.
2. There is a HUGH potential to streamline the construction industry in India. I’m guessing Sequoia will try and see if they can inject some technology into the process and see how it scales with Tata Housing. If it works, then they can target the entire industry and get a piece of the action. I’ve seen people bring foreign building products to India which are priced 25-50% more then a local product and that just won’t work. You need to innovate within India so you can understand the cost constrains and get the locals comfortable with the product.
If this works out, I would expect them to go after the agricultural space and drop some knowledge there as well.