Zoho Corp. has been strategically investing in startups with the intention of building critical technology know-how in India. On Tuesday, the Chennai-based software-as- a-service (SaaS) company invested $5 million (about ₹35 crore) in Voxelgrids, a Bengaluru-based startup that builds magnetic resonance imaging (MRI) scanners, to develop deep technological capabilities and intellectual property (IP) in India. In an interview, Sridhar Vembu, co-founder and chief executive officer, Zoho, talks about the company’s investment and acquisition strategy. Edited excerpts:
Why is Zoho’s focus more on investments rather than acquisitions?
Part of an investment is in the learning process of building the technologies. In cases of acquisition, you are acquiring existing capabilities. So, you are not really learning or building anything new. That may make sense from a financial investment point of view, but we are not really financial investors. We are a startup, and strategic know-how investor. The other aspect is about culture. It’s very difficult to blend company cultures. It is well known that when companies merge, often there’s a lot of cultural and management conflicts. Most acquisitions fail because of cultural incompatibilities. For that reason, we are very reluctant to do any large-scale acquisitions.
Will you just be an investor in Voxelgrids, or is it a strategy to enter the medical devices market?
We are already in the medical devices space with our investment in vTitan, a Chennai-based medtech firm, engaged in a broad range of medical devices used in critical care units of hospitals. So, that’s an area of critical interest for us in the long term. It’s an area of high technology which contains a lot of software content, so it is of interest to us. Also, these are high research and development (R&D) areas that definitely fits Zoho’s strategy and philosophy. That is why we chose to invest in it.
Will you continue to invest in similar companies, and what will be the ticket size?
We have already invested in the semiconductor space through Signalchip, a fabless semiconductor company. Again, it is part of our long-term efforts to help develop technology in India. Semiconductors are a crucial area because it has a very strong synergy with software. So, that’s something we will be investing in apart from the medical devices…
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