The comments seem to nail the VCs on thier imagination – the lack of it. But its their business bottomline – the OM of thier existence – to be profitable themselves first, to develop profitable companies next and then develop the economy of the country thus. Do not expect the VCs who have come to India to throw money on “innovation” or “ideas”. They have seen “ideas as ten-a-penny”, as someone said.

If you want to take on the trend really, be an entrepreneur and take on. It is the onus of the Indian entrepreneur to showcase innovative solutions to the problems that may exist in the indian marketplace – and simultaneously build the confidence in the VCs that they can make it work financially – atleast as good as their money can work in a shaadi or a naukri. period.

I myself have had the opportunity to build and exit an internet business in India (JobsAhead.com acquired by Monster.com). Having been in both positions, I think that the relative lack of “imagination” of VCs is good for the industry. Noone, including entrepreneurs, should be bargaining for more risk than they can bite (or is justified by returns). Concept arbitrage models offer an immediate opportunity, as do midstage internet businesses. The success (hopefully) of VCs on these models will only reinforce the confidence in India as a destination for venture money. Another imaginative period like the dotcom bubble in 1999-2000 will lead us where we know it will.

Again, I do insist that the lack of imagination is only “relative”. There are seed stage businesses that are unique to the Indian environment being nurtured. And most of the uniqueness has lied in execution rather than in the high level concept. A mobile payment solution in a cash driven economy is potentially different from one in a card economy (even though at a high level, both are mobile payment solutions); a search engine is very different; a DVD rental business may look very different in an environment where piracy is the dominant form of usage.

As all of you, we look forward to sustainability of Indian venture industry, and that is contingent on demonstrating success.

It is not really about the transparency, but about actual, active numbers. People in cellcos happily admit to the numbers being fudged, in a manner of speaking. But it is not a market where you can push premium plays a lot. At the lower end, they are already fighting like street dogs for the half paisa margin and even with the diabetically-charged deals they come up with, explosive growth quarter-on-quarter on actual numbers is a tough ask.

As as a result they keep on the lookout for things like Hello Tunes. Honestly, I should not be complaining much, since the rates are rock bottom, but this kind of thing does not last forever, especially when you are basically taking money out of one market segment to underwrite another. I’ve been meeting vendors and providers on and off in the past six months and I’ve not met a single company that is looking at things beyond basic plumbing or providing ring tones and other similar bullpoop as value added services. Everywhere else location-based services and GIS is rocketing off, there is nothing of the sort here. All you get is a shrug when you ask someone.

I don’t know if the Sequoia/WestBridge money came through at Indiatimes, at least not in the time that I worked there when speculation regarding the same was rife and if my memory serves me right, the moolah that eventually went in was a fraction of what was being discussed, which was said to have eventually led to the top dudes walking the plank. That company has the unique distinction of having the most potential (even globally) and doing nothing with it, but that’s a story fit for a book for someone to write someday.

The lack of imagination is more on the part of the companies here, the VCs are pretty much in the same mold across the board, all they ask is: “What’s your growth rate for this quarter? Operating costs/margins? How many more users do you expect to acquire in the coming quarter and in % points the quarter after that?” Most operations, other than the Shaadis and Naukris won’t have answers to most of those questions and since those two types have a fairly robust business/model already in place, the VCs put money into them.

At the same time, I am yet to run into/hear of a VC who is willing to stay invested with you for the first couple of years, knowing that you’d break the surface in the second/third year. For that matter, I am yet to see a genuine start up who shows enough promise to just acquire an active user base in the first two years and then make good money in the third. We are very much stuck in the use your users just as page view fodder mentality.

I agree with you – lack of imagination on part of the VCs is quite clear. Replicate what has worked in the US is a good philosophy but who knows. Sequoia or one of them did a deal with Times of India, aka Indiatimes instead of backing something new.

I think it is interesting to note that folks who are investing in retail and infrastructure are going to do much better in the long run.

Even the consumer space on the net front is not all that developed. Very few of the new players have the ability to make the business case for a service or an application, the best they come up with is something like “hey, look this is cool” and that does not cut much ice with the VCs. So the VCs end up doing the same 10 firms, the Shaadis, the Naukris and their ilk, but the imagination is really lacking from the developer/entrepreneur perspective.

BTW, I assume this is Shai of Delhibelly fame. If so, nice to see you here.