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Wednesday, February 01, 2006
VC Investment Scene In India – Activity Levels Picking Up
Just got off the phone from someone in the valley and was pleasently surprised to note the number of top level people – very senior executives in the tech industry, several VC’s who have all travelled to India in the last two-three weeks. Sumant Mandal of Clearstone recently said that close to a billion dollars have been recently raised for investment in indian based private tech firms. I recently wrote about the state of the VC investment culture in India and my struggle to come out with an answer to the question - when to expect the likes of next google to come out of India. Truth is that in general most indian enterprises are hardly innovation chasing entities, and the framework for VC entry & exits are poorly defined. Coupled with limited VC activity in the past and archaic regulations – these make it a tougher breeding ground for enterprises like that of what is seen in the valley. VC’s and Angel’s may find it difficult to spot the next Flickr coming out of India. Angel investments and VC are so close to each other – the absence of one hurts the other very badly. The big company boards in India are mostly filled with family members and friends. The investor activism is very limited – the culture in general cascades across the ecosystem – the concept of family acting as passive investors leaving the running of the enterprise to professionals are quite limited in numbers and where in vogue it is mostly within well defined spheres of activities - in such cases direct compensations are better and not necessarily linked to sweat equities. Correspondingly the spark needed to work on innovative ideas aided by sweat equities for key employees second to many levels down mostly does not exist. The ecosystem inside India is also tough where job market dynamics at senior levels are less active compared to what we see in the western markets. The talent levels inside India continue to be very high – all it requires is a vibrant ecosystem. Thats all set to change albeit slowly.
Category :India VC Investments, Emerging Trends |
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