It's raining money
Money is like manure. You have to spread it around or it smells.
-Jean Paul Getty
(American Industrialist and Founder of the Getty Oil Company, 1892-1976)
It's a material world and money speaks. Besides linguistics money probably is the raison d'etre for I guess almost the entire working population. India has never had it so good. Money, money and more money. Just ask for it and it is there. A biotech company or an IT corporation, a startup, or just about anything. You need money and it's there. India has never had it so easy and so good.
According to itbusinessedge.com $7.46 billion has been invested in India in 2006. That's 3 times more money than in 2005 according to research firm Venture Intelligence. The biggest deal was the $950 million investment in telecom company Idea Cellular by Providence Equity Partners, ChrysCapital, Citigroup and Spinnaker Capital. Another biggie: Kohlberg Kravis Roberts's April purchase of Flextronics Software for $900 million. The number of deals exceeding $50 million grew from nine in 2005 to 26 in 2006. Venture Intelligence expects an even bigger year in 2007. The top sector for investment was IT and IT-enabled services, followed by manufacturing.
VC investment: India versus others
In 2006 the top destination for venture capitalists was China. China received around $900 million in investment. London came second with a little more than $800 million. India came at number three with $746 million.
According to the 2006 Global Venture Capital (VC) Survey sponsored by Deloitte & Touche LLP in cooperation with the National Venture Capital Association (NVCA) in the U.S 53 percent of the respondents intend to expand their global investment focus, with China (30 percent) and India (25 percent) identified as the two top foreign countries of interest over the next five years. Both countries are seen as places where it is less expensive to build businesses, where there is an emerging entrepreneurial culture and where there is a high quality deal flow. U.S. venture capital respondents cited India as the number one country outside the U.S. where there is access to quality entrepreneurs. Conversely, they cited China as the number one country to get access to foreign markets.
The Portfolio - Punjabi Dosa steamed Momo style
What jingles is what matters. I don't exactly remember who said it but it's definitely true for the VC investments in India. Gone are the days when money only flowed in singular lines read as alien IT ventures. Today it isn't about just IT, it's about value addition, about a ROI, about growth and much more. Remember in 2006 manufacturing came second in private equity report card. Yes, MANUFACTURING, something that was almost written off in India a few years ago.
A Case of West Bridge Capital Partners
Take the case of the portfolio of "West Bridge Capital Partners". In India Growth they have Dr Lal PathLabs, Royal Orchid Hotels then in telecom they have Bharti Telesoft. Mauj, Nazara, Shaadi, Times Internet, Travel Guru. In IT services they have Emagia Corporation, July Systems, Strand Life Sciences, Zenasis Technologies. The bulk is in their Outsourced services portfolio which consists of Zavata, Tarang Software Technologies, ReaMetrix, marketRx, Induslogic, Indecomm Global Services, Celetronix International, Brainvisa Technologies, Astra Business Services, Applabs Technologies.
Will India touch $10 billion in 2007? My guess is it will. According to venture capital research India and China is the place to be in. India many believe has just the right "climate" for entrepreneurial development and in 2007 India is the place to be in.
The Great Indian Entrepreneur is a reality today. Combine that with the right climate and the burgeoning numbers. Take for instance some interesting facts and figures I got from itfacts.biz.
" The top three markets for cable TV subscribers are China (106 mln), the US (69 mln), and India (46 mln).
" iSuppli forecasts India having 405 mln mobile-phone subscribers by 2010, up from 140 mln at the end of 2006.
The Rising Sectors
In next few years the India invest story is in all likelihood going to be written in high growth sectors like nanotechnology, biotechnology, RFID, 3G applications, e-governance besides the traditional ones.
The Last Word
India boom is here to stay. The heat is on and it's only getting hotter. Alok Agarwal, Chairman and Founder of Evalueserve has put it rather well "The Venture Capital market in India seems to be getting as hot as the country's famous summers."
Welcome to the Great Indian Summer!