Technology and the Indian VC
Exercise1 : Look at the array of companies that Indian venture capitalists are investing or have invested in India. Name one company which truly excites you as innovative. And when I say you , think of a hard core risk taking technologist.
Let me try to explain it with a comparison.
Sequoia capital is a very respected global VC firm. It has teams set up to invest in 4 geographies, US, India,China and Israel.
Exercise 2: Check out two observations - for India and for Israel.
- How many partners of Sequoia have technology focus in India versus in Israel?
- How many Israeli investees versus Indian investees do you believe focus on a technological innovation versus business/services innovation?
I wouldn't go into numbers here since I personally don't know these people or companies. But let me just profile one Israeli investee for you. It is called ScaleMP.
ScaleMP has developed the versatile SMP (vSMP) architecture, a unique approach that enables server vendors to create industry-standard, high-end x86-based symmetric multi-processor (SMP) systems. ScaleMP and its industry-leading partners team-up to deliver vSMPowered™ systems with superior performance at x86 server prices.
Mind you , this is just a software company. But look at how it can fundamentally change the rules of the data center game. This is hardcore technological innovation.
Let me also profile the Sequoia partner who led this investment.
Benny Hanigal
Benny Hanigal is a Partner with Sequoia Capital Israel and focuses on semiconductor and systems investments. Prior to joining Sequoia Capital in 2001, he was a Partner in Star Seed, where he led the investment activities in Israel and abroad. Before establishing Star Seed, Benny was Founder and President of Lannet until it merged with Madge Networks where he continued as a SVP for Product Development and Marketing. Earlier, Benny was Co-Founder and Chairman of Alvarion (ALVR). Benny has BS in Electrical Engineering from the Technion - Israel Institute of Technology.
What is the point you might ask? After all, Israel and India are apples and oranges. But my question is very simple - why are such companies not getting funded in India? Is it the case that Indian engineers are not capable of such innovation? Or is it that they are , but such startups have absolutely no hope of getting funded in the short to medium term? I think the answer is latter. If VC's are funding me-too travel portals and e-commerce websites ( I have no grudge against them; Infact, I think they deserve to be funded for creating value) then what do you expect the brightest engineers in India to go after?
Are the Indian VC's fundamentally risk averse when it comes to technological innovation? Will this be the major obstacle in preventing India from becoming a technology leader ? Is that good or bad?
2 comments:
Bipin,
Your blog and analyses are thought-provoking. I'm interested in this space as well, and reading your blog has given truly good insights.
cheers,
vectorSpace
This is a rant that's often heard. There's no point in carping about Indian VC ways. They are just successors to a generation that settled in one job throughout their career, savings being parked just in a PF - and not in riskier bets like equity. So risk aversion is in their DNA.
That said, the only way out as I see is entrepreneurs teaming up, bootstrapping their venture and get one venture off the ground. Show them the lucrative premium the market offers at an IPO and then this breed will queue up outside your door.
I am fully in agreement with your views - since I've been in this business for the last couple of years after spending over a decade and a half in Investment Banking.
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