Indian VCs, AIs and government to push Technology Start-ups

As of November 2014, Apple, Microsoft and Google remain ‘world’s most valuable brands’ with Apple leading the chart;there is no rocket science in comprehending how well you candrive your economy if you have the will and intellect to back technology, innovations and models that enhance customers’ way of living, promote commerce and augment not just marketing but also buyers’ enthusiasm to respond, buy and try new venues of retail purchasing. Nearly half of these most valuable brands globally, from the top 20, carry the tag ‘technology’. It is evident that companies like Google, Microsoft, IBM and others have not just revolutionized business models; they have also fuelled economies around the world and have been consistently originating newer concepts. Another fact is that most of these multi-billion dollar firms have their headquarters in the U.S., the world’s largest economy, with a currency that is used in almost every other cross-border transaction and is also world’s principal reserved legal tender.

Taxation, debt management, fiscal deficits and CADs all come post commerce comes into being, a requisite that drives any nation on its shoulders and is the source of fund flow to the exchequer, generation of employment prospects, bridging the gap between rich and poor, and of course development of national infrastructure. Steel, oil, coal and power were always the areas that made businesses rich, countries prosper and people find jobs. In India, companies like ONGC, Coal India, NTPC, Tata Steel and SAIL play the most decisive role in shaping GDP growth rate, but of late, corporations like Infosys, TCS, Wipro and HCL have taken a dominant share by delivering noteworthy net profit in their financial statements. Then there is a newly evolved concept, the e-commerce and other internet-based start-ups in India, owing to our hefty internet user base, which is the third largest in the world. Snapdeal, Flipkart, Olacabs and Quikr are a few names in this cluster and to the surprise of us all; these have entered the billion-dollar club in just a few years of their founding. Estimates say that the e-commerce market of India will reach USD 24 billion by this year.

Foreign-based VCs, Angel Investors and Private Equity (PEs)have backed the potential of technologically-accelerating India; investors ranging from Tiger Global and SoftBank to Morgan Stanley Wealth Management and Vulcan Inc. have funded Indian firms that are using technology as the key to revenue-generation. Among appreciators of IT- startups are Indian entrepreneurs, Azim Premji (Premji Invest) and Ratan Tata to name a few. It isn’t hard to interpret why IIT and IIM pass-outs these days are either getting absorbed in IT companies/ start-ups or are trying to reverse of trend of job-seeking after degree and are rather innovating novel concepts. Today, when every metro city commuter just needs a tap on the cellphone to call a taxi, to locate a nearby hotel/ ATM, to navigate through puzzling streets, and when online shopping platforms like Snapdeal are planning to set up kiosks in rural parts to help residents order products online, a shift in the sentiments of investors and consultants is the need of the hour.

Forbes has lately released a list of best venture capitalists. These are people/ firms who bet on creative minds and manage to secure outsized returns from their investments. In the list are 11 PIOs (Person of Indian Origin), and on the topmost position in the list is Jim Goetz of Sequoia Capital, the person who placed the golden bet on WhatsApp, the global messaging service. Indian investors, though haven’t made it that large that they would find place in the Forbes list, however names like Anupam Mittal (a co-investor in Olacabs and beneficiary of 25x returns in a span of just three years), Meena Ganesh (stakeholder in a Bangalore-based start-up and beneficiary of 7x returns in a span of 18 months) and Saurabh Srivastava (investor in Sapience and Stayzilla) have substantiated their aptitude. Let me also mention one of the most notable VCs with the Midas touch, Peter Thiel, the man who made a USD 500,000 angel investment in Facebook in 2004 and is today one of the richest VCs in the world.

The motive of this writing is to let Indian biggies know the real potential of the service industry, specially the one backed by technology. Banking, communication have seen a wide participation from Indian capitalists and risk-takers, but IT start-ups still remain an untapped area though one with promising returns on investment. Shares, debentures, mutual funds, property and gold have remained a passion for investors, why not go for a shift of sentiments towards what that has the caliber to not just fill your pockets, but also take country to newechelons of success. Why not an Apple, Facebook, Microsoft or WhatsApp from India? In the emotional call to back the manufacturing domain, let us not overlook the positive prospects of technology; with brains as established engineers, doctors, managers, VCs and angel investors around the world, this motive is not that tricky to attain. Government and capital market regulator, SEBI are to find ways that can boost startups to list on Indian stock exchanges with lenient listing regulations, amendments in norms like lock-in for a period of three years, requirement of identified promoter and use of issue proceeds.All in all, there exists an untapped opportunity for us all, let us make it big and money-spinning.

92 thoughts on “Indian VCs, AIs and government to push Technology Start-ups

  1. Rahul Gupta

    India is a country where beef gets banned, a female is blamed for cricket team’s loss so why and how can we expect innovation.
    Unless mindset of Indians will change, I am afraid nothing will change.

  2. Sandeep Kapadia

    It all depends on your approach and talent.
    If something has to become big, it overcomes all hurdles.
    You know, flipkart and others are running in losses but they have changed the concepts of shopping.

  3. Harsheen

    Sir have you ever backed any IT start-up?
    This is a critical question because you seem to be very positive in creating a brand IT India.
    I wish you good luck and better returns!!

  4. Rajeev Singh

    I am very much worried about the valuations of these Indian start-ups and their sustainability. Many overseas investors are doubtful about their stake in Indian IT startups. Government should take care.

  5. amarpreet kaur

    Snapdeal and Flipkart success is a rare example of IT start-ups in India.
    Actually the issue is that internet, internet-users, infrastructure in India are still in their very initial stages.
    USA and other countries have very fast internet speeds.

  6. Amit buthia

    Venture Capitalists in India is a growing notion.
    Also we should know that VC and angel investors are different aspects, where former invests third party party while latter extends own money to project.

  7. Rahul

    Risk involved in such investments is very high. You must be knowing that 8 or 9 out of 10 such start ups fail in the very initial years. I would prefer investing in debetures rather.

  8. Shikha Sharma

    When we talk about Tata buying corus and Sun Pharma buying prominent drug manufacturer of US, we become proud.
    Same is to be promoted in our IT wing by easing acquistion and takeover norms.

  9. Sonia Kapoor

    Alibaba, Uber have been violating laws in many countries and it is not sure where will the money of VCs and angel investors would land.
    This field is very risky and IT goof up cannot be ignored.
    Many would still remember the dot com bubble.

  10. Hemant Sabarwal

    One thing that many people do not know about Apple and Facebook is that they reversed old trends like Apple sold premium smartphones which have become a status symbol.
    Indians to come up with such innovations.

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