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Venture Investing

October 15th, 2009 · 13 Comments

I can’t but help think that we are missing out on creating a deep-rooted start-up culture in India because we do not have the first two stages of the investing pipeline: angels, and first round investing. In the Indian context, angels should typically invest 1-2 cr ($200-400K) to give enough money for the company to get started and through to the early product prototype. First round investing (typically by a venture firm) should be between Rs 5-15 cr ($1-3 million) for products focused on the Indian market.

What we do have are plenty of Indian funds willing to invest Rs 25-100 crore ($5-20 million) – ideally into companies that are profitable and looking for growth capital. At this stage, the company is expected to be profitable.

The net result is, as someone put it to me: VCs in India act like PEs (Private equity funds), and PEs act like banks!

So, is there a way out from this? I’ll outline an idea tomorrow.

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13 responses so far ↓

  • 1 Venture Investing | Finance site-Credit|Insurance|Real Estate|Investing // Oct 15, 2009 at 6:57 am

    [...] posted here: Venture Investing :and-first, are-missing, but-help, first, have-the-first, india, indian, Investing, not-have, [...]

  • 2 SG // Oct 15, 2009 at 8:15 am

    Yep .. we do not have the Angel culture. Looking forward to your post tomorrow.

  • 3 mav4vr // Oct 15, 2009 at 9:42 am

    Another thing that is I have seen from my admittedly very small sample space is the mindset of the founder(s) or promoters. The founders behave like proprietors most of the time, looking for a fast buck without looking to create value for the product, company and team.

    Thoughts?

  • 4 Batterien // Oct 15, 2009 at 10:14 am

    Most of the people doing investment in India is to gain some really fast profit from the investment. It is just like betting or gambling. They do not have long term planning behind that.

  • 5 kasi // Oct 15, 2009 at 10:19 am

    Risk averse culture is the reason.
    Whether it is on investing or on starting.

    Looking forward to your idea tomorrow.

  • 6 Kvov // Oct 15, 2009 at 1:01 pm

    A man of words and not of deeds is like a garden full of weeds.

  • 7 超声波清洗 // Oct 15, 2009 at 1:03 pm

    A man without money is no man at all.

  • 8 Sampad Swain // Oct 15, 2009 at 1:39 pm

    As you said – “In the Indian context, angels should typically invest 1-2 cr ($200-400K) and 1st Round should be between Rs 5-15 cr ($1-3 million)” is still way too much I feel; especially for companies who are developing consumer internet products. IMHO around INR 10-15 lakhs ($20-30K) is more than enough to take products of that nature from prototype to marketability stage.

    However, would look forward to your tomorrow’s post.


    @Sampad

  • 9 Ruchit Garg // Oct 16, 2009 at 4:20 am

    This is so true!

    Can incubation centers at private college/universities help solve the problem?

    Such institutes have lot of infrastructure at disposal and might also have good industry contacts to get teams started.

  • 10 Dr Malpani, MD // Oct 25, 2009 at 7:47 pm

    I guess high networth individuals like me who believe in entrepreneurship and in angel investing can also complain that it’s hard to find good startups to invest in !

    I am willing to put my money where my mouth is . I am happy to invest as a strategic investor, in entrepreneurs who are using clever technology to help improve healthcare in India !

  • 11 Gautam // Nov 16, 2009 at 8:38 am

    Rajesh

    This is a very valid observation and the hypothesis upon which our fund was created. Ojas Ventures is an early stage venture fund with $35m under mgmt. We invest anywhere between $250k to $3m in a company. Would be great to exchange notes.

    Regards
    Gautam

  • 12 Pallav // Dec 30, 2009 at 11:01 am

    Of late, there have been a few seed funds which invest in startups – like Seedfund. Seeders (http://www.seeders.in) is an initiative that was started by us (me and a partner) that typically invests around Rs. 15 lacs per venture.

  • 13 Blog Past: Venture Investing // Sep 12, 2010 at 5:01 am

    [...] (Mar 10) – One Reason Why Companies Fail (Mar 10) – An Advisory Board (Feb 10) – Venture Investing: Part 1 and Part 2 (Oct 09) – Navigating NetCore – The Past Year: Part 1, Part 2, Part 3, Part 4, Part 5 [...]

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