Infosys writes down investment in DWA Nova
Infosys takes a big shot in the startup sphere…
Technology giant Infosys has written down nearly $15 million investment in DWA Nova, out of which, nearly one-third of the amount has been taken from its Innovation fund.
Headquartered at Bangalore, the firm has spent about $45 million from $500 million investment fund, as per its annual report. It made investments of about $15 million in DWA in February 2015.
According to the company," During the quarter ended June 30,2017, the company has written down the entire carrying value of the investment in its associate DWA Nova LLC. The impact of the write down on Q1 FY18 net profit is $11 million."
Infosys had written down $3 million of the carrying value in Q4 FY17. CEO Vishal Sikka mentioned that the write-down happened owing to a decision taken by DWA Nova’s parent.
"The parent company decided to wind down the company. We had an under 20 per cent stake. The intellectual property is still there, but since the operations had stopped we took a decision to write it down," Sikka said.
The company had made $400,000 in a year on its four million investment in Israeli-startup Cloudyn. This was after it was sold to Microsoft. Sikka added that failures would be part of the fund. "In two-and-a-half years if you work with young companies, there will be a significant failure rate and we have to be prepared for it.”
Major IT companies in India like Wipro, Infosys, Tech Mahindra have built corporate venture capital funds. The analysts are not very sure of gauging the success of their investments. While on the other hand, TCS – the largest IT services company didn’t invest in any startup. It chooses to partner with them rather.
Do you think the startup space requires the contribution of companies like Infosys and other technological biggies? We would love to hear from you.
Source: The Economic Times