In my previous post I had discussed the somewhat gloomy investment climate in the United States. While we continue to make modest investments in highly promising ideas, we are taking lesser risk than we did just a few years ago. A lot of this shift in investment patterns is driven by the returns we are currently getting. As pointed out in the 2005 Venture Capital Report by Wilmer Cutler Pickering Hale and Dorr (a TiECON sponsor), a very successful sale today is a fraction of what we used to get. For instance, the report says, last year just two venture-backed companies were purchased for more than half-a-billion dollars and only 15 were purchased for more than a quarter billion. Ouch!
So where are the most attractive investment opportunities?
Apart from China, which continues to attract high levels of investment, India is another attractive market. Venture capital investment has crossed over $1B in India. And according to projections, the India biotech sector hopes to generate investments of $10B by 2010.
The country is experiencing GDP growth rates that are 2-3X of US GDP growth. The Venture Capital Report predicts that more VC firms will invest in overseas companies, sometimes with a local investment partner. I do not expect that most investments in India will result in billion or multi-billion dollar deals that we would like to see, but my research shows that the time horizons for an IPO can be relatively shorter and probability of a higher return on investment (ROI) higher in India during the next 3-5 years.
How can you get a first hand understanding of the investment climate in India?
As you plan your schedule for the conference, you might want to attend the session "Emerging Trends: Cross Border Investing" on June 16 at 0115 PM and another session at 0200 PM on June 17th that focuses specifically on investment in India.
Other related post: Using innovative business models for India
- Posted by Jay Dwivedi
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