Zoho wants to power the AI part of software for Indian tech cos: CEO Sridhar Vembu

Chennai-based Software as a Service (SaaS) company Zoho Corp. on Tuesday strengthened its position in the medtech space, investing $5 million (Rs 35 crore approximately) in Bengaluru-based Voxelgrids.

The startup builds Magnetic Resonance Imaging (MRI) scanners and Zoho plans on backing the development of cost-effective and indigenous technology by the company. 

In an interview, Sridhar Vembu, co-founder and CEO of Zoho talks about on the copmany’s strategy to be the software of choice for Indian technology companies.  

Edited excerpts     

Why is Zoho more focused on investments rather than acquisitions? 

Part of an investment is also in the learning process of building these technologies. In cases of acquisitions, you are acquiring already 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, strategic know-how investor. The other aspect is about cultures. It's very difficult to blend company cultures. It is well known that when companies merge with each other, often there's lot of cultural conflicts, management conflicts, etc. 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 do you plan to enter the medical devices market? 

We already have an entry in medical devices space with our investment in vTitan--a medtech company based out of Chennai that is 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. Also, these are high research and development (R&D) areas that definitely fits our strategy and philosophy of Zoho. That is why we chose to invest in this company.

Will you continue to invest in similar companies, and what would be the typical investment ticket sizes? 

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 that we will be investing apart from the medical devices area.  

We have also invested in areas like computer vision and related areas which involves artificial intelligence (AI) to analyse images and take actions. We are also investing heavily in audio-video capabilities and building of AI capabilities on top of that.  

So, a lot of R&D efforts are going on internally in these areas. Externally, when we find somebody doing something interesting here and who would like to receive an investment from Zoho, we look at those companies. In terms of investment size, it will be in the range of a few million dollars, similar to our existing investments. 

What are the integration opportunities with these investments for Zoho? 

There are integration opportunities. For example, in something like an MRI or any medical device, there are software components to it. They are typically of three types – software that runs inside the device, software used to analyse the images that come out, and software that integrates with various healthcare systems at a hospital level. And potentially, we could contribute in at least one or two of those areas. For example, the software that integrates with hospitals, we actually already have a subsidiary that builds and analyses that software. We are interested in the AI part of it as to how software can be used to do better analysis.