Ajit Balakrishnan: Most VC Funding US Skewed; Expect Slowdown In 18 Months
[by Cerius Shah] While the consecutive sessions at Esummit 08 at IIT Powai were insightful, few, as expected, had a media focus.
The emerging entrepreneurial eco-system in India was moderated by Vinnie Vyas of Crossover. Ajit Balakrishnan made comments on the absence of VC’s in early stage funding. Pointing to the fact that VC’s currently like to cluster their investments within a sector, like travel (co-incidentally Sandeep Murthy, Sherpalo Ventures, Cleartrip, was also on the same panel).
According to Balakrishanan, the capital markets in the US are set for a reversal and due to the fact that a vast majority of Indian VC funding is US based, many VC’s will likely exit the scene in 18 months. His solution? Let the vast repositories of funds in LIC and UTI be used as indigenous venture capital firms that can fuel innovation rather than rely heavily on foreign funding. Should we start opening up our indigenous coffers or let the markets decide what money was dumb or smart should Apocalypse ‘99 Redux arrive?
Posted In: Money, M&A & Venture Capital, Venture Capital, Companies, Rediff
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Comments (7)
Feb 11, 2008 2:54 AM
What happend to the VC fund that BSNL was setting up ?
Feb 11, 2008 3:28 AM
Ajit is spot on… In fact, it is seen that most of the VC fundings happens in packs… First there was a host of VC funding in Travel portals, then it was Social Networks,...now it seems that mobile marketing is in spotlight…
I guess it is time that indeginous VCs play an important role in funding innovations…
Feb 11, 2008 4:50 AM
I don’t agree so much with Ajit. Well, it is not just about *dumb* money. Yes, LIC and UTI have a lot of money and so do SBI or PNB or IOB etc. But, that is different from *high quality* VC money. Many of these guys had started and some of them continue to operate VC funds. Howcome, none of them made any real impact? When experienced entrepreneurs and VCs from developed markets such as Silicon Valley invest in a company, it is not only the money they bring in, but also management expertise, connections, brand value etc - all of which are absolutely vital for a young startup to get going. I am surprised that someone of Ajit’s stature has made such a *hollow* statement.
Feb 11, 2008 6:18 AM
Morpheus: you can’t deny the herd mentality…some Indian VCs have been heard to complain that there’s pressure from their US associates to invest in the sectors that have worked abroad. Secondly, Ajit isn’t saying that VCs don’t bring anything to the table. Interestingly, Ajit’s view of VCs exiting ventures in around 18 months, mirrors something that Sanjeev Bikhchandani had said in an earnings conference call.
Feb 12, 2008 3:20 AM
What had Sanjiv said in an earnings conf call.
Please enlighten us—really appreciate the pointer.
On one hand VCs are raising big funds and saying they will go to India - recently Canaan $650M, ICICI $3B, etc.
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Nov 11, 2008 5:56 AM
I would not prefer to publicly tarnish anyone’s name. I refrain in most places as bickering produces no good. This is a pointed reminder rather than a mindless accusation.
It is very much Rediff that can do some angel investing. If not with cash, with technology - instead of giving “unlimited email storage”, they could increase web hosting capacities keeping the prices the same and offer the latest in web development platforms on their hosting.
Their blog site sucks too. It’s their total control on every technological aspect of the site. It hints at absence of quality technical talent - they just cannot change any tech offering over 5 years on the web.
Rediff top brass have gone one record many times saying that ads form 90% of their revenue. That’s why they have a “bikini” focus on users.
And to talk about using public savings to fund “bikini eyeballs” !
Disgusting.