What are you investing in Today?

Media has followed the boom and tone-down in venture capital over past 4 years. As much as last 12 months saw a dip in venture capital, I have a feeling that some of the enthusiasm from journalists declined as well. Only the most dedicated journalists have survived the theme fatigue! And as many of us in venture capital have been doing, they are seeking to understand how investment themes have changed over past four years.

In my own observation, venture capital has followed a much accelerated hype cycle over past four years, where many themes have come up, quickly rising to hype prominence, and then settled to the golden mean – yes, there is a golden mean even for the most hyped technologies! Sample the following peaks:

  • 2006 – Transactional Internet, Mobile VAS
  • 2007 – Web 2.0, Retail
  • 2008 – Microfinance, Cleantech
  • 2009 – Education, Healthcare
  • 2010 – Rural distribution perhaps? 3G? Other guesses?

I do not list real estate above because its not a “venture capital” category. The thing with hype is that the extent of hypeis only visible post facto, and that some people will actually make money in the hyped sectors (Online travel for example). The short duration of these specific hype cycles is a concern though – VCs operate well in 3-4 year long cycles, not in 1 year long ones.

Our own learnings at Canaan have been more around aspects orthogonal to funding theme – we have more or less stuck with our key areas of focus over past 4 years in India. The relative emphasis on idea versus entrepreneur, for example, has tilted more towards the latter. We have also made some bets in sectors listed above and future will tell us if their golden mean is golden enough for us!

9 Responses to “What are you investing in Today?”

  1. Gautam Sinha says:

    Alok, Great article.

    It is good to see the tilt towards the “enterpreneur” as compared to the idea. The flavor of the year has by far been chased the most, both by the “me too” enterpreneur and the investors.

    Perhaps, there is a correlation between the good enterpreneur and the good idea.

    On a related note, Indian ecosystem will mature eventually and the industry along with the enterpreneurs and investors must play a part in de-risking some of the investment.

    Cheers.

  2. Harsh says:

    Hey Avinash,

    I am interested in forming an educational startup. So mail me at bhvnharsh@gmail.com; or call at 09831785266. Looking forward to a healthy discussion.

  3. Shashank says:

    Avinash,
    I have a lot of interest in the education sector. We can discuss. Pls. write to me at shashanky@hotmail.com; or call me at 9899583843
    thx

  4. Avinash says:

    Hi Preethy (and others who are interested in working further on an idea in education),

    I have an interesting idea in the field of higher education MBA/MS/Engg etc and wanted to know if ,anyone who has experience in this field or has a lot of passion , wants to partner.I will watch this space .

    Thanks

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