The downturn may be hurting business, but several entrepreneurs have found ways to convince venture capitalists (VCs) to invest in their brainwaves.
Several VCs are currently discussing investments in Indian start-ups who showcased their business ideas at ‘Investor Pitch’, a forum that was part of the recently-held E-Summit at Indian Institute of Technology-Bombay (IIT-B). The E-Summit was meant to boost the entrepreneurial spirit.
VCs showed interest in eight of the 15 finalists, and discussed ways to take the proposals forward.
This was even better than last year when stock markets were soaring and the going was good — of the 19 teams that pitched for capital, only three made it.
Two of those got funding from Indian VCs, while UK-based VC picked one.
Hindustan Times spoke to four VCs, and all felt that a slowdown is the best time to invest in start-ups. “This is a great time to get resources at an economical rate and build a company. When the market improves, it will help the company accelerate growth. So, the timing is perfect,” said Rajesh Jog, managing partner at Waygate Capital.
The VC firm is currently examining a few projects. Added Jog: “This year, the quality of teams and the projects were outstanding. It’ll be fantastic even if two teams get funding. After all, it’s a college festival.”
Following closed-door meetings, investors showed a marked preference for innovative start-ups — from a mosquito trap that will kill only female mosquitoes, to clothes designed to regulate body temperature and speech recognition software that will convert voice to text in 12 Indian languages ( See Graphics ).
“Even though five investors expressed an interest in us, we’ve been asked to work on customer validation and close about two or three deals on our own first. Their investments will be used for scaling up operations,” said Abhishek Singh, co-founder of Simmortel, which has built the speech recognition software.
Not all the teams that VCs expressed interest in will be eventually funded.
After the initial discussions, VCs could ask the teams to work a little more on their start-ups.
“The VCs liked what we presented, but they’ve asked us show some more progress and then continue talks. The meeting was a warm-up session and a good validation of what we are doing,” said Unmesh Mayekar, of Sadakmap.com, a portal that allow users to look up places in different cities and then review them.
Valuations are lower and growth has slowed, but VCs were quick to point out that no downturn is permanent.
“Today, it’s a buyer’s market. Rents are lower, attrition is high and companies have frozen recruitments. It makes sense to invest now because the cost of hiring professionals is far lower,” said Hrishikesh Pore who represented Tata Capital, a private equity firm.