Summary of talks from VC panel@Nasscom Product Conclave (Sudhir Sethi of IDG Ventures, Alok Mittal of Canaan Partners, Ashish Gupta of Helion Ventures, Srini Vudayagiri of LightSpeed ventures]
- IDG’s Sudhir Sethi shared some interesting stats:
- Out of 600 plans that they went through,
- 43% constitutes products, 15% software products, 13% Internet, 13% Mobile, 2% Hardware startups
- Majority of deal flow in software products is from Bangalore, Internet products from Mumbai
- 51% seed stage startups and 41% early stage
- Have stopped looking at > 3-4 year old companies,
- Most of the companies in embedded space are not fundable,
- Internet and Mobile segment looks much better, Enterprise is promising.
- Out of 600 plans that they went through,
- Overall, VCs seemed to agree on:
- Most of the startups have technical leadership, but not business leadership.
- Need market-inward products and not tech-outward product.
- Missing disruption, lots of me-toos in the market.
- Missing strong advisory board.
- Missing Product Management skills – startups need to find a bridge between engineering and sales/marketing
My thoughts resonate with what VCs say with regards to lack of Product Management skills in startups. But at the same time, Indian startups need more mentoring (than VC money) and I don’t see VCs even acknowledging that.
What’s your opinion?
Recommended read: Why startups need product managers
I agree that Entrepreneurs should have Business Leadership and Strong Product Management Skills. I suggest them to read HBR Articles on that.
I like Leadership very, very much. I expect some post on Leadership in this Plug.
Its interesting that we note the gaps and faults but not offer any ways of fixing them. Let someone else/you fix the problems. We’ll cherry pick.
Aditya
Couple of qns were raised about mentorship for startups, VCs of course weren’t too keen on this (isn’t that expecting a lot?);
NASSCOM has some offerings, but not too sure how relevant is that.
In my opinion, these are teething problems in Indian startup ecosystem and am sure we will see more maturity in the coming days (after some bloodshed)
Our VCs’ in india seem to talk of a lot of seed funding options, but dont really actualize them.. to me its an eyewash.. lot of talk, but no risk taking capability at seed level..
then in the very first place, why do they talk about it.. go over 600 plans, and fund 1 of them… is there a biz model available for myspace, when it started ?? if all were to go with the indian vc mindset, then neither growth nor are we going to see promises from india..
when people talk me -toos here is a question… all the successfull internet companies of india in the web1.0 timeframe were also me -toos’, with an eye towards acquisition.. and not to mention, few of our VCs might be a part of it that time..
i think, our VCs have to implement more and talk less…
Agree to most of your points, cookiecutter!
The challenge I see is that most of the VCs are risk averse. Infact, I can definitely say that none of these Indian VCs would have funded cos like Google/YouTube or even MySpace…
Having said that, the entire ecosystem is sort of shaping up. Indian startups need to mature up and same with VCs. By 2008, when we see some bloodsheds, things will be a lot more clearer!
What do you think?
Ashish
Its a bit more serious than teething problem. Most of entrepreneurs in India are people who do it for the independence and not because there is an opportunity to create something new and large. They also tend to be inexperienced and at times naive. Failure is one way to learn but at times its not easy to derive the right lessons from failure also! Mentorship is one way out and Nasscom and TiE are working on those. However given the small no of entrepreneurs this is not easy either. IMHO, one needs to supplement this by mentorship on specific aspects by senior executives from large cos also. Moreover, I hope that more experienced folks also get into start up mode.
Its easy to see why VCs do little to solve the problem. Its so huge that their efforts will have little impact. Why should s/he spend a lot of time in mentoring when the same time can be put in closing deals? Having said that I know several VCs (including the panel above) who do help entrepreneurs with advise over mail etc. In other words, they do invest a bit on building the future pipeline by building relationships with the more promising entrepreneurs. IDG even has an EIR program which is highly commendable. But are any of these scalable? Nope!
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Ashish, Aditya,
here is a bottomline.. VCs HAVE to play a role of mentorship, do hand-holding. Indian enterpreneurs are not idiots or stupid enough, as not to learn!! IF they are coming up with an idea, and want to take it forward.. they have crossed certain barriers already!!
Else, in my perspective, VCs are no different than Baniyas.. or Lalas.. I woudl say educated lalas.. who used to have a DIFFERENT VISION when THEY were not serial entrepreneurs.. or when they needed money, and now when thy sit on piles of cash.. their vision is completely blurred…
We need motivated people in this industry who want to shape up India in the domani of products!!
All am talking on VCs.. Seed is even more pathetic!!
“Indian enterpreneurs are not idiots or stupid enough, as not to learn!!” – Well, few startups aren’t that ready to learn. Look at few comments in posts here</a – many startups aren’t even ready to accept feedbacks.
At Proto.in too, few startups just didn’t acknowledge that they need to market their product.
Its not right to blame VCs for all the mediocre products. VCs aren’t gods, they are also learning. Startups should be more ready to learn, but is that happening? I don’t think so.
Vijay – I do agree with you. I recall meeting few VCs (after the proto event) and in general, they were like – I like ths startup product, but somehow don’t think I can work with the founders.
Case in point – one of the founders simply refused to even ackowledge that they need to market their product. Like Steve Jobs, they thought WoM will take care of the entire marketing! (I guess we are talking about same startup!
)