Infosys, with its $500-million innovation fund, plans to buy minority stakes in startups, going up to 20 per cent, as it looks to tap new opportunities in emerging technologies.
The company has expanded its innovation fund from $100 million to $500 million to invest in technology startups worldwide, with a focus artificial intelligence, automation, internet of things, collaboration and design. The fund will see half its corpus dedicated to Indian startups.
In an interview, Infosys COO UB Pravin Rao, said, “Most of the investments will be small, a minority.” He added that the company has not narrowed down on the quantum of investments to be made.
Infosys has already made its first investment of $15 million in the space, in a spin-off at DreamWorks Animation. The two companies have already formed an alliance where Infosys will deploy its global talent pool available across cloud, big data, Java and open source capabilities to develop next-generation solutions based on DreamWorks’ technology.
As the innovation fund has a worldwide mandate, the IT major will actively look at opportunities in technology hubs of the US.
Rao said Infosys’ startup strategy will focus both on young firms as well as those with certain matured technologies.
“We will look at firms that are in the early stage and have the potential, and we will have the first-mover advantage,” he remarked. Infosys will also be keen on companies that have mature technologies, but are struggling in terms of market access or reach.
“If they are struggling with their engineering or scaling operations, we can help them. We could also look at how to bundle their technology with our offerings,” Rao said. The Infosys COO cited the DreamWorks example — its technology is fairly mature with a focus on the media segment. Infosys’ key consideration while investing in a startup is the potential value it will bring. The IT behemoth is also open to mergers and acquisitions, provided they fit into its overall strategy.
Startup investing is part of Infosys’ ‘renew and new’ strategy. Its focus will be on traditional lines of business, with the idea of renewing them with technologies such as automation and artificial intelligence. At the same time, it is investing in its product portfolio, which includes the banking solution arm, Finacle.
Finally, it is developing a new set of technology platforms. According to Rao, the revenue share from products and platforms is still small, but the focus is on capturing mindshare by demonstrating its capabilities, which could eventually translate into business opportunities.
Exploring paths
*The company has expanded its innovation fund from $100 million to $500 million to invest in technology startups worldwide.
* Focus is on artificial intelligence, automation, internet of things, collaboration and design.