January 2011 marks a year since my return to India as an early-stage venture capitalist after spending 13 years in the US. Despite my earlier apprehensions, things have been quite amazing. I would like to share some of my observations in the hope of inspiring others to move back and ride the crest of the amazing Indian economy and contribute to its continued surge.
WHY DID I MOVE BACK?
Answer is simple: I believe this is the perfect time to be part of the Indian entrepreneurial ecosystem. The economy is booming, but there are many basic problems in areas like the Internet, mobile communications, enterprise IT, healthcare, energy, education and financial services that require solutions – this is a dream scenario for any entrepreneur. In cities like Bangalore, there are already many development centers addressing these needs. The work here entails not only low-skilled jobs. I have friends in companies like Yahoo, GE (Healthcare and Energy), Google, Intel, Biocon and Amazon, who are involved in cutting-edge product development. This I see as a treasure trove of entrepreneurs in the making. Our firm has funded entrepreneurs from many of the companies mentioned.
SWITCHING GEARS
What could be better? I ask this of the many entrepreneurs, including returnees, whom I have the pleasure of meeting on a daily basis and try to corroborate their responses with my observations. The top three challenges returning entrepreneurs seem to face are: getting the early team right, navigating bureaucratic red tape (like incorporation, bank accounts) and finding seed/early stage funding
WHAT DOES A VC LOOK FOR?
I am also often asked what is it that a venture capitalist looks for in a company? What does a VC in India want? An early-stage VC always looks for an outstanding team, aiming to solve a problem in an exciting market, with sustainable differentiation and a solid business model. In addition, there are two criteria particularly relevant to India — strong customer interest in a product or a service that can be verified and measured, and the ability to scale or grow a business. It is also important to understand that a business model that works in one city might not necessary scale across India with all its diversity.
PERFECT TIME This an awesome time for any entrepreneur who is considering a move back to India with a goal to be actively involved in a startup. My tips to those planning such a move is to pick an exciting industry or business segment that matches your expertise. Next, make sure that you choose a founding team to launch the business with great care; make sure you have some people with recent India experience. Do not fall into the trap of worrying about things beyond your immediate control such as traffic, bureaucracy and poor infrastructure. Finally do not look back, burn the bridges to wherever you came from, so that you are not tempted to return prematurely. After all, it usually takes five years or more to succeed as an entrepreneur and India is currently one of the best places in the world to live that dream and to impact the world.
I wrote this for the Economic Times. Would love to hear your perspectives on this topic. Here is a link to the ET e-paper column.