US VCs in India

WSJ writes about the growing number of US VC firms now coming to India:

Successful Indian entrepreneurs and financiers in Silicon Valley are discovering that going back to their roots is good business. As the U.S. technology sector has slowed, many Indians say they prefer to invest in the dynamic subcontinent rather than the mature U.S. The rise of the Internet-based global communication and sharp declines in Indian long-distance charges because of telecommunications deregulation also make investment easier and less risky.

Promod Haque, managing partner at Norwest Venture Partners, returned to India only four times since he left New Delhi for the U.S. in 1972 — until this year. He says he has taken four more trips in 2004 to look for opportunities and to “open doors for our companies,” especially in telecommunications, a sector that is struggling in the U.S. but taking off in India.

Vinod Khosla, among Silicon Valley’s best-known venture capitalists, has gone part time at Kleiner Perkins to devote more time to business and charity in India. Vish Mishra, a senior partner at Clearstone Venture Partners in Menlo Park, Calif., and other venture capitalists are vetting “pitch” sessions with Indian start-up businesses via Web conferences.

Other entities are bolstering the Silicon Valley-India infrastructure, too. Chip maker Intel now makes 40% of its investments abroad, up from 5% in 1998, says Intel Capital Managing Director Sriram Viswanathan. “The pain level has gone down” in India, he says. “The offices look the same in Bangalore and Santa Clara.”

Silicon Valley Bancshares has opened a subsidiary in Bangalore, and Cisco Systems Inc. said in September that it plans to open a venture arm there. Silicon Valley’s legal powerhouse Wilson Sonsini Goodrich & Rosati now has a full-service India practice. “On average, we are forming one subsidiary in India per week for U.S. companies,” says Raj S. Judge, who heads the India practice team. “Three years ago, it was one every quarter.”

I hope they look beyond software services and BPOs into funding technology innovations.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.