On VCs Having To Deploy Capital In India

Some news stories over the past week give an insight into how VCs percieve the Internet and Mobile space in India.
First, the Economic Times concludes that VCs aren’t interested in the web 2.0 companies. Why ever not? Because of low level of Internet penetration that doesn’t allow the business to scale; also that not everyone is comfortable with using the Internet, and not many go beyond email. Deepak Kamra, General Partner, Canaan says that web 2.0 companies are not on his “priority list”; he adds that they’re looking at companies with a high level of localization.
However, another report in the Times of India presents a more bullish picture: In 2006, VCs invested $200 million in Internet and mobile businesses, up from $36 million in 2005. This year alone, they’ve pumped in $13 million, as per Venture Intelligence.
From what we hear, pressure to deploy capital in Indian startups is increasing each month, and we are likely to see an increase in funding announcements in the coming months. Too much money chasing too few deals? As Rahul Khanna of Clearstone Ventures says – VCs who missed out in China don’t want to miss out in India.

Comments have been disabled for this post