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Venture Capital in India - Part 2

Finally, I am able to devote some time this weekend to catch up on all the reading I have missed out since I returned to India in August.

And also post a few thoughts.

Going through the various posts, discussions and comments on Venturewoods, I realize they are doing such a good job. No point in me replicating all those links here again.

It looks like VCs/Y Incubators are more interested in funding the right team than simply a good business idea/plan.If the right kind of team is in place, and if we can show that its a stable, committed team, it seems to be alright even if the current idea being worked on by that team does not have a feasible revenue model.And in some cases, the investors may also supply the right tweaking of the idea to create a viable revenue model OR more interestingly, in the interactions between the team and the investor/s, new ideas with lot more potential for financial returns would take shape.

The above point is in contradiction to what I have been reading/saying earlier. That there are many budding entrepreneurs in India but not many good ideas :-)

May be what the VCs mean by a good idea is not just a revenue model, but a strong team that can see the whole thing through and thereby protect the investment.

All said and done, VC money is still much more expensive than any other form of investment. In the next post/s, I will try and give my thoughts on beating the system. Watch this space !

Comments

Wondering if the legal and social infrastructure is strong enough to support VC type venture in India. What I hear is that political situation and corrutpion may be an issue. Would like to see your thoughts. I have only second hand opinion.
Kumar Narasimha said…
Hi Million $ Countdown,
Firstly, all the best on your journey to $1 million.Will keep revisiting your blog to check the progress.
Secondly, I don't think that the political situation in India puts a dampener on VC type ventures.The economic reforms are irreversible.As for corruption, VCs typically enter into new economy type ventures. I don't see how generic corruption in the bureaucracy (Speed money factor) will affect setting up of small ventures that too mostly in the hig-tech arena.
One important factor is the legal system surrounding intellectual property rights. There are some gaps in the implementation of the IPR laws, but they seem to be getting addressed as well.

On the whole, the Venture eco system (lack of effective linkages between academia-industry-financial sector) and the social conditioning against taking risks, are more critical than the legal and political issues.