NEA-IndoUS closes $175M

NEA-IndoUS Ventures expects to hold a final close on an inaugural fund of $175 million in mid-April, firm co-founder Vinod Dham told PE Week.

The new firm focuses on early stage opportunities in India. New Enterprise Associates is the fund’s primary limited partner and has lent its acronym as a prefix. “Most of the money is from friends and now from VCs that made money off the first fund,” Dham says.

Dham, father of Intel’s Pentium Processor, says he decided to become a venture capitalist in India to give back to the country that educated him at nearly no cost. “This is really sort of payback time for me,” he says. “I came back with the conviction that we had to create more entrepreneurs there. I decided the best way to do that was become a VC.”

After 16 years at Intel, Dham jumped into the venture business in April 2002, co-founding NewPath Ventures with Tushar Dave, who had been a vice president of business development at Broadcom Corp. The duo helped launch fabless semiconductor company InSilica, enterprise security company Nevis Networks and telecommunications company Telsima. “The first fund was small because I didn’t know how to raise funds,” Dham says. “Then, when I found out how to do it, I found out I didn’t like doing it.”

But Dham’s new firm hasn’t had any trouble fund-raising. It closed on $105 million in 2006, according to Thomson Financial (publisher of PE Week).

Dham co-founded the firm with Vani Kola and they later brought on Kumar Shiralagi as a managing director. The firm, which has offices in Bangalore and Santa Clara, Calif., plans to invest in consumer-related technology and IT-enabled services as well as companies that provide business process outsourcing and knowledge process outsourcing.

Its website shows that it has invested in three companies to date: InSilica, Minekey Inc. and Obopay Inc.

InSilica, which was launched by NewPath, has raised $52.4 million to date from various VCs, including $18 million in July 2006. Dham sits on the board of the Santa Clara, Calif.-based company.

Minekey Inc., based in Sunnyvale, Calif., offers a personalized Internet search engine. It raised $600,000 from NEA-IndoUS in December, according to Thomson Financial.

Obopay, based in Redwood City, Calif., offers mobile payment services in the United States. NEA-IndoUS wants to see it expand into India. Obopay has raised $17 million over three rounds from a variety of VCs, including $7 million last September.

NEA IndoUS complements NEA’s efforts in India. In February, NEA announced it had opened an office in Bangalore and had appointed Ben Mathias to lead what the firm hopes will be between a $125 million and $200 million effort in the country. NEA will invest in mid to late stage opportunities in telecommunications, media, alternative energy, technology-enabled services and infrastructure. It hopes to get exposure to the most promising early stage companies through NEA-IndoUS.

Still, for all the money NEA and NEA-IndoUS are planning to put into Indian companies, the area is not without its problems, Dham says. “The weakest link in India is the management,” he says. “They have a tremendous amount of raw talent and visionaries at the top, but they’re missing this layer of middle of management. When I was at NewPath Ventures all four of my companies suffered from that. Now we have returnees who are going back [from the U.S.] to the country to play this role, but it still remains a tremendous frustration.”