Vinit Bhansali wrote [at 07:51 AM 5/15/2007] :
> The primary reason is that, ironically enough VC firms are flush with
> funds. Let me explain this with an example: A VC firm raises a fund.
> It tries to raise, say, $100 million, but in today's environment, is
> more likely to end up with more than that. The average VC firm has
> 3-5 people looking at investments. With each person being able to do
> justice to say 5 investments at a time, that already means that the
> average investment is AT LEAST $4 million.
>
> Poof! There goes your early/seed stage deal.
That's the exact same problem VC funds face in Silicon Valley/NYC too.
Not exactly true. A startup in Silicon Valley can actually use $5-10
milion in a first round of funding. A startup in India doesn't need
that kind of money in the first round, especially if we are talking
about a company whose output is software. The kind of money an
average Indian VC raises for its fund, is, however, comparable to its
Valley counterpart (in the same order of magnitude, whereas the
funding required in series A differs by an order of magnitude)
Why early stage startups find getting funding difficult is then just
a consequence of the above.
Udhay
--
((Udhay Shankar N)) ((udhay @ pobox.com)) ((www.digeratus.com))
