As somebody who has closely watched Indian companies grow big, in what ways do you feel the typical Indian entrepreneur is different from his/her counterparts in other countries?

There are probably more similarities than differences since successful entrepreneurs all require certain traits and abilities that allow them to overcome the challenges of starting new businesses.

That being said, entrepreneurs in India are probably better able to leverage whatever skills and financial backing they bring to the table since there has been less of a tradition of start-up financing and as a result founders here are probably more resourceful and able to bootstrap their companies on a smaller budget than would be required in other parts of the world.

On the negative side, it is probably more difficult here to generate initial revenue growth and compete with existing, more entrenched companies.

Venture capitalism has risk written all over it. Have failures been a learning curve for you? Are there signals before the ‘ship goes down’?

The key, of course, is to first pick a business where there is a strong demand and market opportunity but the main lesson is that you never know what macroeconomic factors will crop up and have a negative impact on the demand for the product or service offered by a new venture, especially in the Internet space where changes occur quickly.

The key to success in this case is to have a management in place that is sensitive to these changes and can react quickly. This can involve implementing changes to staff or product design. Assuming that the senior management has been able to run the company in an efficient and prudent manner, the differentiating factor is to have a CEO who can attract the right people and can inspire the staff to do more than is expected of them.

The feedback loop on a new business is very quick and unforgiving and revenue growth is the first sign of whether the company will become successful, regardless of the new technology being used. If the business model has been well conceived, it will soon be reflected in increasing margins.

Trident Capital has been active in all the stages of investment. Do you see any patterns, such as less of time required before a company hits big today?

With the advent of outsourcing, software as a service, the Internet, remote processing, etc., it is now possible for a company to move much more quickly from the raw start-up to the revenue growth phase.

As a result, companies need less initial financing and can operate with a smaller staff making it possible to see results more quickly. Where one would have been willing to wait several years to prove out a business model, it is now more likely that you will know after 12-18 months whether you have the right leadership or product.

We have discussed this issue many a time with others but the perfect answer still eludes us. Do entrepreneurs really get along well with the investors on board? What are the typical issues that you have seen cropping up?

The key is for both the entrepreneurs and the investors to have a shared vision for the future of the business, so that the usual problems that surface in any start-up are viewed merely as hurdles to reaching the ultimate goal. This permits more open communication between investors and management and will create better and quicker solutions to problems that arise.

Without this common purpose and shared vision and empathy from the investors, the founders are more likely to let problems get too serious, so that they cannot be solved or fatally wound the company.

Typical issues involve key personnel (product design and sales) and failures to meet budgeted goals on revenues and expenses.

You were talking about India having the potential to the centre for global engineering. Is it merely by chance or there are some solid reasons?

This is a logical outcome from the progression over the past ten or more years of IT outsourcing development in India. As companies move up the value chain, it is not surprising that there will be more opportunities in more value-added services such as engineering services. This trend is also reinforced by the fact that world-class firms are now much more comfortable outsourcing their critical processes to Indian firms and the level of professionalism and client service in India has improved to match these expectations.

There are concerns aired everywhere that VCs only put in money and take the spoils. Would you like to react to that allegation?

A good VC experiences the same ups and downs as the founders since they view the funding as a true partnership and not just a financial transaction. It is more of a partnership than a typical bank financing. Problems arise when this is not the case.

Nonetheless, VCs are first and foremost fiduciaries and manage other people’s money and therefore must be responsible for making sound investments. Many of the myths and disputes with VCs arise because investments must be structured to reflect the risks of venture financing as well as to protect investors’ capital.

As somebody who has spent a lot of time on the Indian soil, what is your opinion on legislation – are they friendly towards entrepreneurship and VC funding?

India is known for having a challenging legal and bureaucratic environment, but there has definitely been a lot of movement in recent years to make it more transparent and easier for start-ups.

There is a lot of talk going on about the impact of liquidity crisis world over. Is there any impact on VCs’ bandwidth?

As it becomes more difficult to move investments off VC balance sheets due to the deteriorating IPO environments, and as the credit crisis makes it more challenging for companies to make acquisitions, all VC firms will have to slow down the pace of new investments if they want to maintain the level of personal involvement with their portfolio companies. It will force VC firms to invest in fewer start ups since they require most time and attention.

More and more people are returning to India to don the cap of an entrepreneur…

I definitely see a trend of more successful Indian entrepreneurs and managers deciding to return to India to take advantage of the enormous growth and opportunities as well as a way of giving something back to the country.

Finally, what’s your take on women entrepreneurship in India?

Women have carved out an important position in India’s IT industry and even though they have not yet penetrated senior management ranks to reflect this increasing influence, I expect that many of them will take advantage of entrepreneurial opportunities that will present themselves.