Venture Capital Industry in India and Bay Area - a few points of comparision

A lot has been written about venture capital in India and US, and here is my take on it from the perspective who has lived in the bay area for 9 years, went through the dot-com bust and helped sell a company , worked at one of the internet darlings only to be working at the best investment bank of the world.

The industry in India and Bay Area is vastly different

1. Stages of investing - Bay Area as you can imagine is the incubator of all technologies and the venture capital ecosystem is mature and setup with firms specializing at each stage of the company starting from seed stage investing to late stage firms. However, in India most venture capital firms have morphed into late stage growth capital private equity shops. My personal take on this is that over a period of time they would see a dearth of deals as the venture funding required at the seed stage or early stage of investing is missing.
   
2. Succesful exits - Most venture capital firms have not witnessed the kind of exits that they have seen in the valley - the likes of Google, Yahoo!, Electronic Arts. It is going to take some time for venture backed companies in India to see such exits.
   
3. Environment of innovation - I see a lot of development, especially in the IT hubs of Bangalore and to some extent in Mumbai where the young folks are leaving their cushy jobs to become first generation enterpueners. Also a lot of venture capital firms are visiting universities, colleges and having enterpuenership meets to create budding enterpueners. Such efforts need to be appreciated, however, it is still in a nascent stage and would take some time to develop.
   
4. Business Models - I think this point bears a lot of thought. There is a lot of difference of how the early stage companies are set-up. India is still trying to solve basic logistical problems like bus ticket inventory (bus travels is an unorganized sector with most operators having 2-3 buses with little incentive to bring inventory online) or yellow pages where the carpenter in the neighborhood is listed on the web. So, most business models that get funding are either models that have been successful in the US and are being replicated in India.