Loading ...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!
Hi Alok,
Good to see your post on where Venture capital is being invested each year. Can you give some examples of Education startups that are funded in 2009. What are the key problems in Education sector you think needs focus right now.
I am working on an education startup idea and want to get your thoughts.
Thanks,
Preethy
Preethy
Saw your website http://www.glosmart.com/alpha/
You have to tell investors how to return their X investment now as 10X within few years. This is not understood by investment seeker kids. The alternative is bootstrapping which is normally more difficult or easier depending on the people,the processes, the ideas and the environment etc
This looks like the hype in the western market. The ripples in india are atleast with a 5 year lag. Every hype produces a few legends or market leaders. Where are the e-commerce leaders in India, or cleantech, education, web2.0?
Alok,
Are the peak-years listed by you for the India market or the world market? I don’t think 2009 has seen a peak in terms of VC investments in Education and Healthcare sectors.
Both Education and Healthcare sectors in India have seen a lot of investment in 2008-2009, but I would classify them more as PE investments as a majority of the investments went into established companies looking to expand. Please correct me if I am missing something here.
Similarly, in 2008, I am not sure about a peak in Microfinance, but Cleantech has not peaked yet (2009 is almost over).
It would be good if you can provide list the amount of VC investment in each of the sectors which peaked in that particular year against the total VC investment in that year in India. This would help us understand it better.
Thanks,
Shyam
Alok
I work with and airline Cargo and see immense opportunity with logistics (mix of freight forwarding through air ,ocean ,road ) and warehousing etc.
I do plan to venture out and VC’s also should initialize their antenna for Logistics as this is the next sector to blossom .It is directly related to road, infra and airport and sea port development.
Everybody watch out for exponential growth as IT would be used comprehensively for yield mgmt and track and trace
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
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
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.
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.