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VC purse for Software: 2008 'No Money', 2011 'All Money'
By Eureka Bharali, SiliconIndia
Bangalore: 2010 remained quite lucky for the VC industry with around 40 exits from different companies wherein they witnessed around 10 to 20 percent more returns of their initial investment. And in 2011 they expect even more. There is a huge interest for those in software.
"There would be a huge interest in terms of software applications for small and medium businesses. Startups in the software product spaces will see more room to venture in this growing industry," says Anand Lunia of Seedfund. For SMEs the need ranges from infrastructure solutions to increase productivity to security solutions. Applications such as enterprise resource planning (ERP) software and software as a service (SaaS), which focus on SMBs will rule the roost.
Lunia pinpoints that the room is created due to the lack of a complete focus towards the need of SMEs. "MNCs focus more on the large enterprises' needs which do not co-relate with the needs and budgets of the small entrepreneurs," he says. In the consumer front it's more about personal needs like Quickheal, a security solution for personal use or even regional language softwares that help one participate evenly in this technology guided world.
Infact, as per a recent study by CB insights, software was the biggest VC money gobbler in 2010, with the sector witnessing more than 607 deals compared to a total of 736 deals in other sectors. The research firm compared investment since 2002 in software startups - including web and mobile companies. The big numbers in the VC realm lured a number of foreign VCs to India seeking higher returns.
"In the technology venture arena we see more players coming in. The year 2011 will also see a number of funds go for raising capital; perhaps the highest so far in recent years to invest in these sectors. I also see the emergence of Indian investors on the rise for PE and VC funds," says Sudhir Sethi of IDG Ventures.
