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10.17.07
VCs In India Prefer Investing In Startups To Stock Market
 By
Brajeshwar Oinam
Many VCs have tied up with investment banks to reach out to the budding entrepreneurs in the
country.
International funds such as US-based Kleiner Perkins, Mayfield, Quantum and Evergreen and Switzerland's VGD have either tied up, or are in the process of tying up with Indian banks to leverage India's blinding economic growth.
I was reading the Business & World section of the Hindustan Times and something caught my fancy - VCs prefer start-ups to stock market. The realm of VCs, Angel-funding, Startups is rather new in India and more importantly weird to most of the common Indian masses - be it IT, ITES, Programmers and budding entrepreneurs.
Many overseas Venture Capitalist and Non-resident Indian (including India returned Indians) have realized that investing in Indian start-ups would be far more rewarding than the country's current booming stock market. This may, in a way, sound rather too optimistic with the fact that the Indian rupee is competing very well with the US Dollar at the moment (the US Dollar is lower than INR 40 at the time of writing this article).
Venture CapitalistMany VCs have tied up with investment banks to reach out to the budding entrepreneurs in the country. International funds such as US-based Kleiner Perkins, Mayfield, Quantum and Evergreen and Switzerland's VGD have either tied up, or are in the process of tying up with Indian banks to leverage India's blinding economic growth.
The current trend in India is that of the budding entrepreneurs sprouting left, right and centre; and these VCs are ready to tap that spirit. Investment bankers say financial services, infotech services, pharmaceuticals and real estate are real hot sectors to be in.
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Out of these, real estate and infrastructure has already very high valuations, making them unattractive for smaller VC funds. Other sectors like insurance, for example, has set a scorching growth rate of 50 to 55 per cent. It will be apt to point out that India's high growth sectors have consistently outperformed annualized returns from the benchmark BSE Sensex that has given average returns of 33.5% in the last five years.
However, first time entrepreneurs should be aware that these VCs are not too keen on seed funding nor will take personal favors to invest in you. One has to understand the fact that VCs are looking for exponential returns and will thus invest only in sectors or works that has/is showing good prospect and progress. Not necessarily to go against the VCs but The Funded is a good place to keep a tap on VCs (Paid Membership).
My personal tip for your startup - apply for the SUN Startup Program
Here is a personal tip to those budding, first time entrepreneurs and startups in India. Sun has recently expanded its SUN Startup Program to India (and China), which are similar to what they have in the US. Take advantage of that and apply for the same if you are in seed-stage of your startup.
The SUN startup program comprised of some cool high profile IT Programmer, consultants and marketing people located in the US, India (Bangalore for the Tech team and other teams spread across Mumbai and New Delhi). As part of this program, you get heavy discounts on purchase of SUN products, up to $150,000 (that's pretty good for a startup in India). Sun is committed to provide you with enterprise-grade equipment and make it easy to get your startup up and running quickly, easily.
Continue reading this article.
About the Author:
Brajeshwar is an ace digerati and an ardent believer of
KISS (Keep It Simple Stupid), he envisions pushing the technical
envelope time and again for the betterment of commercial and
practical applications.
http://www.brajeshwar.com/
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