Sramana Mitra, an entrepreneur and a strategy consultant in Silicon Valley, comes out with an amazing perspective about venture capital (VC) and entrepreneurial maturity in the Indian ecosystem. With tech giants committing large investments in India, and many VC firms upping their interest, she thinks that in today’s India, the commodity in short supply is good entrepreneurs. In VC parlance, fundable deals are few and far between.

She points out that this goes back to India’s traditional role as the world’s back-office and the skill set that has developed in India is that of engineering management and coding. As she sees it, the Indian managers may not understand global technology markets and may be found wanting in the marketing discipline. She thinks that services being the forte of the country - the VC partners tend to take the view that the entry barriers are low and the existing strong service players may get stronger and hence the investment appeal for funding startup service firms may go down.

VC’s may like internet, mobile, travel, matrimonial type of sites, and investors are looking at other areas such as retail, real estate etc. She concludes that due to a number of such reasons that the Silicon Valley would continue to be the hotbed of technology innovation, which Indian back offices can then implement and scale. Blogger Charles Zedlewski, who regularly writes about enterprise software trends has a similar set of concerns and thinks that with all the VC money flowing into India, a new startup model for Indian companies.

My Take: I note that more than 95% (my estimates are based on the compiled list of web 2.0 enterprises) of the web2.0 setups have primarily come from within the US. Kudos to the technology leadership that the US is showing here - forget Asia or Europe.  Initiative, speed, and zest for trying out in the tech sector still remain a US vestige. Ofcourse this is good for America and by extension good for the world.

As I see it, it's also the time for action in places like India right now. Some like CK.Prahalad expect China & India to dramatically change things in the years ahead. A recent delegation of venture capitalists visiting India, while noticing infrastructural problems, also noted the ethos of circumventing such difficulties to carry on. While some investments are beginning to happen, the ground reality is that vast majority of venture money tends to go into existing and later-stage businesses. There is little or no real VC money available in India that startups can tap easily.

Companies that are receiving money in India are either spin outs from existing large businesses, captive units, or second-tier outsourcing providers that may lack the size or scale to compete with IT service giants and want the private equity money to grow through rollup and acquisitions. In the US, venture money goes into early stage, pre-product, or pre-revenue companies, while in India, a majority of the private equity is going into late stage businesses. A friend asked me when to expect the likes of next Google to come out of India. I had no answer to provide.