Lack of institutionalising delays VC investments in India

Bangalore: "A lack of institutionalization of deals is delaying VC investments in India," said Varsha Tagare, Director, Intel Capital, India, while speaking at "Investor Panel: Interaction with the Demo Pit" at 'Headstart, Compute 2009'. "We have a two-step investment review, that involves scrutiny and longer decision cycles," Tagare added.

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In this context, Mohanjit Jolly, Executive Director, DFJ India outlined on the prime factors a VC would look at a start-up before investment. The team that is at the core of innovation, the market viability of the product under development and the ability of the product to leverage on to become more sustainable are the key factors that in our checklist.

Meenakshi Sundaram, Founder, IDG Ventures India, was only happier to agree with Jolly's viewpoints and went on to add that the first sign that a potential investor shows interest or abstains from a product could be gauged by the initial frequency of meetings that happen between the two arms of the business.

"Saying no to a business proposal is a very delicate proposition and a better understanding between both the sides is the solution," averred Karthee Madasamy, Director, India Investments, Qualcomm. He also lamented at the absence of a system in India where the government helps raise capital for entrepreneurs with less severe penalties. "A 'no' today does not signal absolute termination of involvements in future," stated Gagan Kumar, Partner, Accel.

"Never approach a VC without a strong concept," stressed Harish Gandhi, Executive Director, Canaan Partners, India. The panel stressed that an entrepreneur must be fully aware of the dilution of one's stake as a consequence and assuaged fears relating to intellectual property (IP) rip-offs by stating that such a scenario is unlikely to ever arise, given the loss of reputation as a consequence.