Early Stage Deal Flows

One of the Venture Capitalists in the Silicon Valley recently asked me why there are no early stage deals (arguably) in India like they do in the Valley. The reasons are clearly unclear to me.

One of the reasons could be the lack of development of culture of entrepreneurship overall. There is definitely a ‘business mentality’ in many communities in India – is it of wealth creation? Small business is not exactly wealth creation. What we see in Silicon Valley is the culture of wealth creation through entrepreneurship. It is a culture of creating value, working for betterment of human life and creating wealth. What does it take to create a culture of entrepreneurship to create wealth and value? What does it take for VC's to invest? A large section of investment community agrees that VC's are opportunistic investor (by definition?) and it is up to the entrepreneur to create or find opportunities. Or, is it? I have seen both venture capitalists and entrepreneurs working in a perfect eco system to create this culture. In many of the start-ups which succeed, it is a 50-50 partnership (give and take a small percentage here n there) between the VC and entrepreneur.

The other reason could be lack of evangelism on entrepreneurship in universities. Stanford university encouraged its faculty to participate in commercializing technologies through private industries. Entrepreneurs are rock stars in the valley. They are not looked as “money making” capitalists. To be an entrepreneur is to be cool in the valley. Not so much everywhere yet in India. We need more evangelists for entrepreneurship.

The other reason could be education – classic argument – teach students to work for others OR make students to learn to work for their own?

Whatever the reason is, we definitely need more entrepreneurship. People may say what am I talking about – there is a flurry of VC activity in India. Well, there is only Private Equity arbitrage going on right now – very few early stage deals.