Comments on: VCs & Their India Investing Strategies

By: Atul Vaid

Atul Vaid — Thu, 17 Aug 2006 09:44:02 +0000

From personal experience, I can vouch for the fact that the so-called VC funds in India are just fat, well-fed cats looking for easy pickings in firms who have already been around for some years and are looking for expansion capital. For all the self-congratulatory releases by VC firms in the press, I dont see any action around seed financing - its all second/mezz financing. Where's the risk? these guys are bankers dressed in casuals… and getting their pound of flesh with even less risk than the banks.

By: Rajan

Rajan — Wed, 26 Jul 2006 07:07:43 +0000

Hi Visesh,

I would'nt completely agree with you. I am seeing that of late a wonderful & very rosy picture about the technology entreprenuership scene in India is being painted by those who are situated out of India. You might wanna be in India speak to entreprenuers like Rajiv for instance and find out what is the actual scenario here.

This erroneous picture I think is getting created because you are getting your information from the VC's. (Haque, Sriram etc)

Btw don't take me wrong here, I am very very bullish about the Indian markets and exteremely optimistic about but can not say the same thing about the VC's who are looking into India and that is where i differ from your thesis.

Rajan

By: rajAT

rajAT — Tue, 18 Jul 2006 09:06:35 +0000

What are you talking about – Technology centers outside Bangalore and Hyderabad. Even Hyd and Bglore has a looooong way to go.

Have you ever heard a company in India getting funded with an unproven management team. Nooo !! All venture money is going towards late stage funding.

You can read here more on the “risk capital in India”

http://rajatgupta.wordpress.com/2006/06/20/risk-capital-in-india/

rajAT

By: Pankaj

Pankaj — Mon, 17 Jul 2006 17:54:14 +0000

It will be very interesting to see if high tech companies and Angels/VCs stick to Bangalore and Hyderabad with a sprinkling in Chennai/Bombay-Pune/Delhi. Or, as it appears to be taking shape, will more and more companies be taking advantage of every part of India that has significant resources and transform it into another Silicon India territory. Hence, creating many more technology centers outside of Bangalore and Hyderabad.

By: Santosh Panda

Santosh Panda — Mon, 17 Jul 2006 12:58:34 +0000

Rajiv, let me share the developments happening in India to sustain the industrialization.
The major highways connecting major cities with neighbor cities creating few twin cities like Pune-Mumbai, Bangalore-Mysore, Chennai-Coimbatore… will allow India to spread the industrialization. There are second-rung cities like Chandigarh, Bhubaneswar, many in Tamilnadu and AP will make this industrialization reachd interior part of India.

Regarding your query on “Caste” system, private sector doesn’t run on caste systems, they run based on efficient and skilled resource. The same is true for India. I have worked long years of my career in India and I hardly saw any company working based on caste bias. India has gone few step ahead in this.
Also Indian government is introducing “Knowledge Committee” and constitutional amendments to make it easy for private sector to facilitate absorbing more lower caste into their manpower.

Vineeth, here are some Entrepreneurship Centers or groups in and around Madras
http://www.tiechennai.org/
Meetup.com in Chennai
http://www.meetup.com/search/?keywords=&dbCo=us&dbOutsideUsLink=&country=in&notzip=&zip=meetup5&go.x=19&go.y=9&go=GO

By: vineeth

vineeth — Mon, 17 Jul 2006 07:30:39 +0000

Gaurav, good point there. There also seems to be no Entrepreneurship Centers or groups atleast where I come from(Chennai-Madras). If any one is aware of such groups please point me to the same.

Further, a lot of young professional would rather go work for a brand name company, than a startup. This is just my experience from working in one of the few startups in the city for the past couple of years after moving back from the US.

I read elsewhere, about a hands on approach of some early stage seed funding VC with geography focus (just Bangalore).

A lot of people with 6-10 years of work experience are returning back to India with valuable experience. This is might be the ideal group that could propel this forward.

By: Gaurav Agarwal

Gaurav Agarwal — Mon, 17 Jul 2006 05:43:12 +0000

Ah well, though the vc community is showing great interest in the Indian market, what we really need is a growing angel investors community. Early stage capital is only available in the form of borrowings from friends/relatives or bank loans. Since most companies fail to kickstart at this stage itself, vcs will find fewer interesting deals to work with.

By: Erik

Erik — Mon, 17 Jul 2006 02:15:30 +0000

I don't claim to be an expert on India at all, but that economy has some major speed bumps ahead of it. Two off the top of my head ; the vast majority of people are peaseants. Can Delhi and Bombay and other major cities absorb all those people when farming is industrialized? Secondly, although the young generation has begun to shed these ideas, a caste system is still heavily ingrained in the culture. And I don't believe a caste system can opperate with a capitalist system that encourages entrepreneurs. The "pull your self up by your own bootstraps" cliche doesn't work if you are an untouchable or a high caste ( each for different reasons). I do hope the world's largest democracy can make those transitions.

By: Rajiv

Rajiv — Mon, 17 Jul 2006 01:45:40 +0000

Hope all this attention will lead to a ecosystem forming in India and gradually move towards funding high risk ventures. There have been hardly any good news for early stage ventures who fall into the emerging technologies category.