`Start-ups need long-term vision to woo VCs'

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Mr Kiran Karnik (right), President, Nasscom, and Mr Deepak Ghaisas, CEO, i-flex Solutions, at a press conference in Bangalore on Tuesday. - - G.R.N. Somashekar
Mr Kiran Karnik (right), President, Nasscom, and Mr Deepak Ghaisas, CEO, i-flex Solutions, at a press conference in Bangalore on Tuesday. - - G.R.N. Somashekar

Our Bureau

Bangalore, Dec. 6

ENTREPRENEURS can attract venture capitalists by thinking long-term. Indian companies need to shift their product and technology-centric mindset and become market-wise, say venture capitalists.

At the National Association of Software and Services Companies (Nasscom) meet on `Creating an Ecosystem for Innovation,' speakers from venture capital funds such as Battery Ventures, JumpStartup and Baring Investment, spoke on the monetary problems faced by the Indian start-up companies.

Prof. T. R. Madanmohan of the Indian Institute of Management-Bangalore, says, "Product companies are not the darlings of funding agencies." Venture capitalists (VCs) avoid funding product companies in India, as there is a lack of long-term vision on the part of the start-up company. Business plans need to be explained to the VC, said the speakers.

Mr Manik Arora of Battery Ventures, said that the employment of international marketing professionals by the start-up would also help de-risk the model. Battery Ventures invested in Bangalore-based Tejas Networks, an indigenous telecom product company.

"Intrapreneurship, encouraging employees to take their idea to a proof of concept, must also be pushed," said Professor S. Sundararajan, Chairperson, NSR Centre for Entrepreneurial Learning, IIM-B. He also announced plans to set up Indian Entrepreneurs Capital Association. This will aim to facilitate 100 deals of initial investment for entrepreneurs in the next four years. The centre will be a platform for venture capitalists, start-ups, multinationals and the Government to network.

The Government has responded to the cry for help. Dr Renu Bapna, a scientist at Technology Development Board, DoT, said, "Help is provided in three forms equity, loans and grants. The Government will provide a loan of up to 50 per cent of the project cost."

TDB is a statutory body within the Government framework to help indigenous companies, R&D institutions, start up companies and/or technocrats. Entrepreneurs engaged in agro-product processing, IT and the development of engineering machinery can seek help from this department.

The VC scene in the country is pretty nascent. "VCs are going through a maturity curve only now," said Mr Alok Mittal, Barings Investment. "We will see the results in the next 15 years, said Dr Sridhar Mitta, MD and CEO of e4e Labs.

(This article was published in the Business Line print edition dated December 7, 2005)
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