Sunday, November 21, 2010

India Venture Capital and Private Equity Report 2010

On 2nd November 2010, we at DoMS IIT Madras, witnessed the release of the India Venture Capital and Private Equity (VCPE) report of 2010 by Prof. A. Tillai Rajan in the presence of distinguished guests, such as Mr. Arun Jain, chairman and CEO of Polaris software labs, Dr. M. S. Ananth, Director of IIT Madras, Prof. C. Rajendran, Head of DoMS and Prof. L. S. Ganesh.
The author of the Indian VCPE report, Prof. A. Thillai Rajan gave us a brief summary on the key findings published in the report. The report captures data of the past six years i.e 2004 to 2009 and  highlights certain features which are both motivating and astonishing. The investments happening in Indian through VCPE investors stands to be third largest in the world. A study of  338 VCPE investors revealed that even though these investors have poured in large amount of money, only 0.17% of the companies have been able to utilize this capital. Bulk of the investment, about 69% by numbers and about 85% by amount, is of foreign origin and too much volatile. Even though the amount is impressive, the nature of the investment breeds fear since most investors have single investment and little commitment. Most investments, about 78% in all are focused at urban enterprises and mostly the deals take place in metropolitan cities. In other words, they are not inclusive. Furthermore, the investors are “consistently inconsistent” as Prof. Thillai Rajan put it. Only ten investors are consistent, of which 40% are Indian. This belies the proportion of total investments we saw above. Also, the steady decline in the number of new investors invites concern. The report has a healthy contribution from students and is accepted in various journals.
The studies carried out and compiled in the report make it obvious that we as a country cannot afford to be complacent just because the conditions are favourable now. It is necessary that we look into the matter and prevent the pretty picture from turning ugly.

DoMS Interface Team 
MBA Batch of 2012

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