#1 Herd Instinct

Most of the VCs in India look at their peers for any investment decision, if one of the VC takes their investment decision on particular field; all the other VCs follow the same trend. There is lack of passion, commitment, stability, proper knowledge and the understanding of a business on how it runs. Most of them ignore the long term perspective and deny the funds.

For example, the e-commerce companies in India received funds more than $500 million in 2011, but the same fell to half of that in 2012 and less than $100 million in the year 2013. Now, the e-commerce sites are struggling to even raise their initial investments.

Similar trend followed in the mobile sector in 2005-08, financial sector in 2007-10 and the education sector in 2006-09. Most of the startup ventures have either closed down or have been forgotten by VCs.

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