India's second-largest IT firm, Infosys, has partnered with US-based venture capital firm Vertex Ventures as a part of its strategy to gain access to start-ups that work on disruptive technologies.
By having a tie-up with a venture capital firm, Infosys now joins a list of global tech giants that linked up with VC firms to scout for start-ups. Acquiring or investing in start-ups is regarded as the next big growth driver for the technology firms.
"Our strategy of partnering with a VC is something, which other corporate ventures of technology firms too have followed. It helps us quickly reach the scale we eventually aspire to as it is challenging for any one firm to find the most innovative start-up," an executive close to the development told Livemint.
"This approach helps us maximise the new-age technologies being worked by different start-ups to some of our clients," said the executive.
Earlier this month, Infosys chief executive and managing director Vishal Sikka said the company was mulling over acquisitions 'similar' to how Accenture and Cognizant did to achieve its $20 billion revenue target by 2020.
The IT giant increased the size of its start-up fund by five times to $500 million this January. Besides, Sikka has allocated $250 million for investments in Indian start-ups.
Vertex Ventures, founded by former Facebook executive Jonathan Heiliger and former Accel Partners executive In Sik Rhee, has so far raised funds worth $141 million to support start-ups in areas "ranging from cloud computing to cyber security." It has already made investments in four early-stage start-ups.
An Infosys spokeswoman confirmed that the company has invested in Vertex Ventures without giving details on the transaction.
But some experts have questioned the "rationale" behind Infosys's partnership with a US-based VC firm. They are of the view that a "similar partnership with an investor focused on emerging country like India may have been more been beneficial."
"I hate to be so critical but Indian IT companies are falling off a cliff with their infatuation with Silicon Valley. The big opportunities are in India. That is soon going to be the largest, (most) open, Internet market in the world," said Indian American technology entrepreneur and academic Vivek Wadhwa.