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Sunday, May 28, 2006

Zero Stage : Hottest VC Op in India

The hottest VC op in India is in the Zero stage. The growth stage has become a strict No, No since all public listed companies are quoting at ridiculously high valuations and there is no point in even wasting time doing due diligence on them. The VC general partners in India are somehow busy looking only at them – for fear of losing their carry and whatever little is left of their reputation. But what they lose sight of is the fact that the hedge fund money which is pushing the Indian stocks to stratospheric levels don’t sound warning bells before they hit the switch. And these kids would soon find themselves trotting their way to the cleaners….!

In the seed stage there are wonderful ideas being pursued by brilliant individuals. Yet they are not so visible since they ( unlisted individual teams ) are not so brilliantly organized. One needs to train himself to know where to look. Many of them have read my blogs ( favouring zero stage funding ops ) and have approached me. [ ] I too keep doing my bit and some of them are under advanced stage of incubation. If one tries taking them to the Indian VCs, they would have rejected them long back. Know why ? They are just looking for a quick exit before they have even made an entry ! Bad lessons learnt from short backoffice stints. They never know the joy of creating an enterprise. They have neither tried creating one themselves nor have they got the ability to make the right investment call. They are mere also-ran VC extras.

Incubation is what clicks. It’s a fine art. I’d rather define it in simple terms as the art of guiding an idea from zero stage to execution and eventual listing thro a string of services. Once it is complete, Indian VCs would like all of it and would shamelessly announce themselves in their portal home page as “ We are a $ ____00 million Venture Capital Fund focused on investing in early stage opportunities in India .....”. And they expect us to believe it….!


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