Last week over dinner with 4 top Venture Capitalists in India, the thoughts turned to early stage funding in India. As most entrepreneurs will tell you, seed stage investments in India are hit or miss. Entrepreneurs struggle to get angel and seed stage investors to move quickly. Most AA rounds take 3-4 months to close. Early stage (Series A) takes 6 months. There are angel networks that take longer.
I have been privy to several discussions that entrepreneurs have with their investors and its hard to help them close faster because many Indian angel networks and investors believe they want risk-free investments.
That all is about to change to a large extent.
The VC’s initially told me they were thrilled Dave was making these $50-$100K bets in Indian companies, since it gives them a bigger pool of good startups to fund.
Little do they know that most of the Indian entrepreneurs have different ideas.
Over the last week 500 has announced over 10 investments in the India (in less than 6 months), have hired Pankaj Jain full time to invest in Indian entrepreneurs and have publicly declared their intent to invest in 50 startups in 2013.
Just so we can all understand the magnitude of this commitment:
In all of 2011 angel and early stage investments went to 52 companies in India in the technology sector.
500 will match that in less than 1 year and will possibly do more than all other “angel networks” and individual angel investors in India – COMBINED.
I have talked to all the 19 company founders, who have received money from 500, yCombinator, TechStars, Startup Chile.
They have no intent to come to Indian VC’s to raise their series A.
They have access to US investors who move quickly, respect their time and are willing to make decisions with very little information.
Does that mean Indian VC’s are done for?
It means a big chunk of the best and brightest who want to build global, scale-ready and capital efficient companies in Cloud, SaaS, Mobile and consumer Internet will go abroad and get money from investors in the US.
And Boom – just like that, Dave, Paul and Pankaj have changed the equation for Indian startups.
Sitting largely in the US.
Yes, that Pankaj is in Delhi is not lost on me.
One person can change the world – Believe you can do it and get it done.