The Holy grail of Indian VC
Why? Everyone I have spoken to so far shakes his/her head when they hear I aim to ride the VC wave in India. This blog is an attempt to understand the entire VC scene in India , not just tech VC. No , what you read about in businessworld is the PE(Private Equity) boom. PE folks typically invest in mature companies looking to expand/grow. In contrast , a venture capitalist invests in early stage companies. And if you have just an idea and/or a business plan , you are looking for angel investors - individuals who will bet their own little fortune on you.
Seed funding is still hard to come by in India. A report by Rafiq Dossani at Stanford University, sponsored by TiE, puts the percent of total risk capital invested in early/seed stage firms in India at 6.9. (FY2004). The corresponding figures for Israel,UK and US are 32,39 and 29. Even China's figure is nearly double - 12.5.
Read the report here :
http://aparc.stanford.edu/publications/accessing_earlystage_risk_capital_in_india/
The aim of this blog is two fold. First , discuss what prevents the emergence of the truly innovative startups from India. Second, challenge the conventional/classical model of VC as it exists today and discuss what model would be better suited to the Indian ecosystem.
More than the numbers or the theories , which you can find in the report above or elsewhere, I would attempt to discuss this with real examples - early stage startups,entrepreneurs,VCs ,deals which went through and which didn't. Any implicit networking would be an added bonus , ofcourse.
1 comment:
I think VC is something that one should do at the end of their career and not at its beginning ; Try answering the questions -
1. How will others rate my experience with making or selling something that changed the world ?
2. When I sit as a VC listenting to entrepreneur's ideas, would my past credentials and achievements instil in them a sense of reassurance "this-guy-has-what-it takes" ?
3. What tempted me to to take up VC as a career - has it been my confidence in leveraging my abilities and my connections ( on the basis of what I've done before) to help realize this entrepreneur's dream without blaming him for his inexperience ?
4. If I apply for the job of a V.P-Sales in this startup, will I get the job on the basis of my past experience and will I be able to do justice to the job if I get it ?
When he gets `Yes' for an answer, it will qualify him as an experienced Mentor and Strategist in the relevant field, which is infinitely more important value that the VC can bring to a startup than the moneybag.
Indian VC partners don't realize when they bemoan lack of investible ideas around, that startup ideas are always raw when they get pitched, they need to be iterated and beefed up. That's the VC's job to see the inherent potential of the idea early on and guide the founders. They tend to act as Mentors when they badly need one themselves. Just look up the background of a few VCs and the projects they uptake - and compare with a Mike Moritz or John Doerr - you get the picture.
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