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Norwest's Goel: We're ready to open an office in India

VabGoel.jpg
Vab Goel, general partner at Silicon Valley firm Norwest Venture Partners, is spearheading the firm's investing efforts in India. Despite the hype, only a couple of Silicon Valley venture firms are investing in early-stage companies in India.

SiliconBeat: Is India on fire, or what?

Vab: You can't pick up a magazine where India isn't talked about. It's happening faster than we thought. There's a lot more talk about companies getting formed. The valuations are pretty high...

SiliconBeat: You guys at Norwest have been snooping around India and looking for investments there for the past 18 months. How come you haven't opened your own office yet?

Vab: There are pros and cons to opening up an office quickly. If you, as a whole partnership, aren't committed, and don't have experience working in India, you're going to frustrate the partner you've hired to work alone there.

SiliconBeat: You've invested in 18 companies that have R&D centers in India, and made only two direct investments, Persistent Systems, and Yatra. Are you going to pick up the pace?

Vab: We're giving things a lot of thought. We want keep our bar high. You know, the smart entrepreneurs know what to look for in a venture capitalist. They want help building their network, and advice to hire and set strategy. It's not just money. As a firm, you need to have a strong ecosystem, and Norwest has been building that network. Every month, at least one of our partners is in India. The next step is to have people have based in India. The goal is to have someone there there by this year.

SiliconBeat: So just how are valuations?

Vab: Early stage companies are getting valuations at levels comparable to China. You have to be careful. If you look at true early stage companies, there aren't that many investment opportunities yet. The few that are there, are going to get big prices.

As for later stage companies, the valuations are probably higher in China than in India China has taken multiple companies public on the Nasdaq; that has investors paying more.


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Comments

Investing in India? What does that mean? Investing less money to get a higher return? Hedging ones bet even more? Wow what a new concept?
I am an Indian and love my country. I do want new innovations to happen over their, but I do believe in this remote consulting models which goes under hidden jacket of investing in India. Please do have some respect for the country and its talent and heritage and please work on building businesses in India and not just investing in India. As Venture partners you folks are respectable, rich and considered the smartest folks in the industry. Please do some social justice to the society and build solutions which can also be, if not as easily, but relatively easily consumed in India as it would be in North America. Every VC in the Sandhill is making trips to India so that they can listen to a million pitches in India and invest in some of them, possibly. Why don't you folks look at the problem in a different manner? Look at what the other segments of business has done. They build products that are equally consumed (as equality that possible can be sustained in a self-balancing world economy).
If I become a VC then I would focus on building business wherein, just like the US business model of invest in companies in US and would like to hear that the $4 billion dollar market would reachable within the next few years and US is the 90% owner of that market. Why can't businesses be built in India? Why just some techies being hired to develop product for cheap (Indian salaries) and then sell them in North America only (if not majority of them) and make a huge return on investment.
When have we heard of investment pitches where products will be build in India because we have a near billion population which can act as a huge consumer market for the product? This will help in the process of balancing the economy. Look at India's economy. Without the huge dollars being invested for software/hardware development that will be consumed in North America and West Europe we do not see much happening otherwise.
I would invest in technologies that would need moderate investment and show me India as the primary market. Why? Becuase the consumer market is much larger their than most places in the world.
Again, I am an Indian and love my country and would do everything to make it grow like the other progressive countries in the world, but I do not support the moves jobs out of US model either. Tons and tons of innovation has happened in US and the investors who have made billions under this wing should not forget that either.

SG

Sukanta Ganguly on July 8, 2006 9:27 AM
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I have yet to see, a successful product company out of India, were VC's made money! Most of the Indian companies are service oriented stuff, majority consulting in SW, and getting SW services company IPO or buyout is not a good value prop's, as there is no real IP behind etc.. Speaking from experience in India getting a HW Product company of the ground is clear challenge, even I am doubtful of the Fabs being proposed in Southern India, as India lack's Reliable Infrasturture ( Electricity,Water, Roads)etc..

I think these VC's are riding the go go 90's in India, offcourse lots of disappointment awaits!

RK on July 8, 2006 12:21 PM
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I think it is time for india based VCs(whether they origin from siliconvalley or not) to start taking risks and bet on (product/internet) start-ups. Because the market is there and it is there for the taking.

Vish on July 8, 2006 6:07 PM
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Being someone who is based in India and following both the investment and entrepreneurial communities closely, I agree that not a lot of product innovation is happening out of India yet. However, there is significant tech driven service innovation (India focussed servcies)and there is some IP involved in the technology driving these services. Eventually product innovation will follow. The good news is that valley VC's have recognized this and recent fundings of 4 travel portals such as Yatra, makemy trip.com, etc, a mobile payment service (paymate)are ample testimony.

Deepak Srinath on July 9, 2006 8:49 AM
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Hi Mr. Deepak Srinath,
Can you contact me via my email address? My email address is sganguly@yahoo.com. I would like to have an email chat with you about innovations happening in India.

Thanks
SG

Sukanta Ganguly on July 9, 2006 9:43 AM
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Well just because you have bunch of portal companies who's focus happens to be in Indian market, does not mean a product business model is succesful, having being started few successful startup which were product focused, one needs to have very good understanding product requirements, specially sitting in India and developing product for western markets is an challange, also Indian markets are dominated by brand existing Indian brands or Western brand products. Also consumers in India have a Preception Western/Imported products are better.

RK on July 9, 2006 11:14 AM
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RK,
I do on theory agree with you but I also believe all we need is a start, somewhere, with some intent. I do agree that doing a portal is not a technology, maybe just a small window of business opportunity to fulfill. I also agree with you that most of those business (or so-called businesses) are very near-term focussed. Look at Yahoo, Ebay, etc. All of them started as portals and then their are a numerous me-too's out their in US itself.
I have also done real product development in a few companies in the past few years. I have never felt that there was any intent to sell the products that I developed in India. As a matter of fact in my last startup six year ago, I did fly down to India to meet with Satyam Infosys, BSNL and Bharti Telecom. I did spend a good amount of time explaining the value proposition to them and also worked on some pricing elements but just could not get them to accept it. They wanted only Cisco equipment but could not afford the price point, even when Cisco's product was less featured than mine. So I do understand the brand loyalty point that you are making. But that was six years ago. I think things should have change quite a bit now. What's your opinion? Let me know. sganguly@yahoo.com

Regards
SG

Sukanta Ganguly on July 9, 2006 1:07 PM
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Folks, I think good products are coming in Indian marketplace.
Have you followed recent news in ContentSutra about Tinfo Mobile http://www.contentsutra.com/tinfo-mobile-wins-reliance-application-contest-for-an-m-literacy-app
There are such excellent innovations evolving.
We are start-up product development service provider and I can bet in coming years there will be cool stuff visible.
I was involved in some of the product development like Spoke (www.Spoke.com) which were pretty cool social networking tool 3 years back but such cool stuff has taken 3 years to land in India. I echo what RK said, most Indian consumer's mind is guided by western success factor of the product.
Therefore it is very difficult to introduce persuasive innovation. Also when investment is available, more entrepreneurs can take risk.

SP on July 9, 2006 3:13 PM
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Having worked in big services companies in India, and big product companies in USA, I can say Indian companies are more focused on money making through services than spending money on innovation and R&D. There are very few entrepreneurs who take risks in product development (hatsup to them), but mostly fail in marketing.

Hope big companies like Wipro, Infosys who amassed wealth through services business spend some money in product development/R&D.

Having said that, things are changing fast, smart entreprenuer should venture into start ups now than later!!

http://bala.desihub.com/blog

bala on July 9, 2006 7:07 PM
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hmm... the same good old discussion of Product vs Services companies in India :-)

I am also of the opinion that services companies were the need of the hour when it started in India and now - people have started to create products. Internet based businesses are probably the next easiest business to be in, with low infrastructure costs - and I feel that it is a good start.

Ashish on July 9, 2006 10:40 PM
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Innovation is happening: But the valuation is bit outrageous. I found the valuations are compares to us in many way which doesnt represnt a true valuation unless the business model can be scalable to international arena. Watch out or people are gonna burn their hands.

India.. things work different you know that. The only way you can value an Indian venture is to be one.

Vijay on July 24, 2006 6:44 AM
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