Early stage funding for promising start-up firms appears is set to receive a boost with local and foreign venture capital (VC) investors
lining up investment plans as the economic recovery gains strength both in India and abroad.
Over 30 new VC funds have started putting money in start-ups across various sectors such as clean technology, micro finance, rural technology and genomics apart from conventional segments, a marked contrast to the bleak days of 2007-08 when the global financial crisis hit these investors hard.
The pace of economic recovery now coupled with factors such as higher investment returns and easier exit options have triggered off fresh interest among both domestic and foreign VC firms to invest in India. Amongst foreign VC (FVC) firms, funds such as Artiman Ventures, BAF Spectrum, ATEL Ventures, Blue Orchard, Mercatus Capital and Foundation Capital have already made the initial investments in Indian start-ups.
Newly-set domestic venture capital (VC) funds such as Aavishkaar Goodwell, Ambit Pragma, Axis Holdings, Rabo Equity and VC Hunt are also cutting deals across sectors, according to data maintained by private equity tracker- Venture Intelligence.
“The economic slump has not hit India as badly as it has impacted the West. Early-stage investing is a risky proposition in indecisive markets. This is where India scores well over other markets. Venture funds are seeing limited downside potential while investing in Indian start-ups,” said Harshal Shah, CEO, Reliance Technology Ventures.
VC firms invested $475 million over 92 deals in India during calendar 2009. In the quarter to December alone, VC firms logged 42 investments worth $265 million — significantly higher than that during the same period in 2008.
According to analysts, one of the main reasons for VC gathering pace in India is higher returns and easier exit options.
Most VC funds expect a return of 25-30% on their investments annually. VC funds that invested in listed companies — or had investments at the time of going public — exited these stocks at high prices
when markets were climbing in mid-2009.
Companies such as Gayatri Bio-organics, First Solutions, Excel Glasses, ESS DEE Aluminium. Punj Lloyd, Motilal Oswal Financial and Gujarat State Petronet have seen an exit of VCs from their shareholding scrolls. Companies such as Compulink Systems and Spanco and groups that recently came out with public offerings such as Pipavav Shipyard and Indiabulls Power still have VC holdings between 7% and 20%, according to ETIG’s database.
“The risk aversion attached to early stage investing during economic downturn has come off by a good measure. Once the start-up is validated, venture capital funds do not have any reservations to invest in them these days,” said Gaurav Saraf, director, Epiphany Ventures.
While domestic VC funds have it easy in respect of receiving licences, the majority of foreign VC funds are investing in India through the foreign direct investment (FDI) route. RBI is granting approvals to funds to exclusively invest in nine specified sectors (with tax pass-through benefits) namely IT, biotechnology, nanotechnology, poultry, dairy, biofuels, hotels and hospitality centres, seed research and chemical research & development.
Foreign funds would want to invest in India through the foreign venture captial route as it allows them an easy exit at the time of an IPO. Funds investing through the FDI route will have to hold on to their investments for one year after the listing,” said Pranay Bhatia, partner, Economic Laws Practice.
According to Mr Bhatia, foreign VC funds, at the time of exit, will have to adhere to the valuation guidelines if they are investing through the FDI route.
RBI’s valuation guidelines is not applicable to funds that come through the foreign VC route. Foreign funds investing in domestic venture funds (that are incorporated as trusts) will have to obtain approvals from the Foreign Investment Promotion Board. This is not needed in the case of funds investing through the FVC route.
Madurai, India (CNN) — Naryanan Krishnan was a bright, young, award-winning chef with a five-star hotel group, short-listed for an elite job in Switzerland. But a quick family visit home before heading to Europe changed everything.
"I saw a very old man [eating] his own human waste for hunger," Krishnan said. "It really hurt me so much. I was literally shocked for a second. After that, I started feeding that man and decided this is what I should do the rest of my lifetime."
Krishnan was visiting a temple in the south Indian city of Madurai in 2002 when he saw the man under a bridge. Haunted by the image, Krishnan quit his job within the week and returned home for good, convinced of his new destiny.
"That spark and that inspiration is a driving force still inside me as a flame — to serve all the mentally ill destitutes and people who cannot take care of themselves," Krishnan said.
Krishnan founded his nonprofit Akshaya Trust in 2003. Now 29, he has served more than 1.2 million meals — breakfast, lunch and dinner — to India’s homeless and destitute, mostly elderly people abandoned by their families and often abused.
"Because of the poverty India faces, so many mentally ill people have been … left uncared [for] on the roadside of the city," he said.
Krishnan said the name Akshaya is Sanskrit for "undecaying" or "imperishable," and was chosen "to signify [that] human compassion should never decay or perish. … The spirit of helping others must prevail for ever." Also, in Hindu mythology, Goddess Annapoorani’s "Akshaya bowl" fed the hungry endlessly, never depleting its resources.
Krishnan’s day begins at 4 a.m. He and his team cover nearly 125 miles in a donated van, routinely working in temperatures topping 100 degrees Fahrenheit.
He seeks out the homeless under bridges and in the nooks and crannies between the city’s temples. The hot meals he delivers are simple, tasty vegetarian fare he personally prepares, packs and often hand-feeds to nearly 400 clients each day.
Krishnan carries a comb, scissors and razor and is trained in eight haircut styles that, along with a fresh shave, provide extra dignity to those he serves.
He says many of the homeless seldom know their names or origins, and none has the capacity to beg, ask for help or offer thanks. They may be paranoid and hostile because of their conditions, but Krishnan says this only steadies his resolve to offer help.
"The panic, suffering of the human hunger is the driving force of me and my team members of Akshaya," he said. "I get this energy from the people. The food which I cook … the enjoyment which they get is the energy. I see the soul. I want to save my people."
The group’s operations cost about $327 a day, but sponsored donations only cover 22 days a month. Krishnan subsidizes the shortfall with $88 he receives in monthly rent from a home his grandfather gave him.
Krishnan sleeps in Akshaya’s modest kitchen with his few co-workers. Since investing his entire savings of $2,500 in 2002, he has taken no salary and subsists with the help of his once-unsupportive parents.
"They had a lot of pain because they had spent a lot on my education," he said. "I asked my mother, ‘Please come with me, see what I am doing.’ After coming back home, my mother said, ‘You feed all those people, the rest of the lifetime I am there, I will feed you.’ I’m living for Akshaya. My parents are taking care of me."
For lack of funding, the organization has been forced to halt construction on Akshaya Home, Krishnan’s vision of a dormitory where he can provide shelter for the people he helps. Despite the demands and few comforts his lifestyle affords, Krishnan says he’s enjoying his life.
"Now I am feeling so comfortable and so happy," he says. "I have a passion, I enjoy my work. I want to live with my people."
Citizens who find the thought of dealing with India’s babudom a nightmarish prospect have reason to feel vindicated. The “country’s suffocating bureaucracy” has been ranked the least efficient by a business survey of 12 Asian economies, which said working with India’s civil servants was a “slow and painful” process. The survey said Singapore’s civil servants are the most efficient among their Asian peers but tend to clam up when things go wrong. For India’s babus, the survey said: “They are a power centre in their own right at both national and state levels, and extremely resistant to reform that affects them or the way they go about their duties.” Singapore was ranked first for a third time in a poll of 1,274 expatriates working in 12 North and South Asian nations on the efficiency of bureaucrats in those countries. The poll was last held in 2007. “During normal times, when the system is not stress-tested, it operates very well,” Hong Kong-based Political & Economic Risk Consultancy said in a 12-page report of Singapore’s bureaucracy. “However, during difficult times — or when mistakes are made that reflect badly on the system — there is a tendency among bureaucrats to circle the wagons in ways that lack transparency and make accountability difficult,” the report said. The survey ranked Hong Kong second. Thailand, despite four years of street protests and a year of dysfunctional government, was ranked third. China, which has been campaigning to fight corruption and improve efficiency in the civil service, was ranked 9th in 2009, two places down from 2007. The 12 economies, in order of ranking were: Singapore, Hong Kong, Thailand, S Korea, Japan, Malaysia, Taiwan, Vietnam, China, Philippines, Indonesia and India. AGENCIES
Apr. 7 – A Sikh journalist threw a shoe at Home Minister P. Chidambaram during a press conference in New Delhi on Tuesday. Jarnail Singh from the Dainik Jagran was angry with Chidambaram’s reply to his question on the 1984 Sikh riots. I think this should be a genuine way to show protest.
“Hijra” or “Eunuchs” are very common in India. You see them at traffic stop, red light districts and in trains! See the article below which pretty much shows the true of them in India. They are NOT considered as human, because they have no gender???
An except from Today’s ‘Time of India’ new paper. Jeez, how dumb can we get? Read the article above, which shows Indian political parties are going the opposite direction, when the whole world is moving towards unity, one world and peace! I mean why the fuck are we taking about a stupid statue (no offence charlie), cant we focus on the 48hr power cuts in India, growing terrorism, food prices, crashign markets, pollution, economy, poverty, suicides by farmers – all in india – and a billion other things?
