Broadly there are two kind of stock investors – those who know the companies they are investing in and those who don’t. The first ones use insider information or put their analytical skills at work to predict which company would/should/must do well. They take a calculated risk.
The second ones (like me) just buy stocks of “seemingly-upcoming” segments, and they place their bets on how fast they can guess a rise in stock value of a particular market segment. Like i never tried to find out why and where would Idea invest the IPO money.
Its the lower risk and reasonably_good_profits, that make the people the second kind. The dumb but dangerous kind.
The same hold good for VCs 🙂
I have seen many IIT/IIM people on board of VC firms, just putting the raised funds up to whats_been_good_and_selling market. If my statistics are right a call/support center, service based companies, webized google add_word optimized product will never face deficits of funds. Web is a killer technology and sales platform, but not all problems can be addressed that way. You can never sell dog food online 😉
A unique idea with good value to customers = Good business. Period.
And, when you create a substandard mock of a existing idea you create mediocrity.
And i strongly feel, this is *not* the right way. No one thought web-search in 1996, No one thought virtualization could be commoditized in 2001, No one thought mobile phones could fit in pockets in 1990. Indian VCs (I feel) still are not betting on black horses. They are not ready to invest in intellectually-property or product based companies. They still are looking for 20-30% growth plans.
And this is what we hear from VCs ;-
1. 60% we don’t invest in this area. (hmm, but your website covers all googlable computer science area)
2. 10% we don’t understand your product/market. May not be able to help ( Perfectly OK )
3. 10% You don’t have a proven team (Milind has 15 patents, and i have never lost – be it AOE/interview or JEE 😉 . But yes we are first timers)
4. 10% Why don’t you sell over web. (Dude, its an enterprise problem. Customer need to be told how more than what)
5. 10% – These are the good ones. And i have my hopes alive 🙂
This is also a reason why there is a mushroom growth of “VC consultants”. Infact, when i asked one VC_consultant, if he trusts the product. He simply said, he would have to :), and VCs also need not fully understand it.
No one ever gets fired by buying IBM or Microsoft products, but thats not the reason why good startups are born. Its the confidence they endeavor bring in and the risk they encourage the user to take, makes them a winning startup.
Indian startups (includes us) needs angels and sensible VCs who can understand entrepreneurship and promote startups with solid base and good Intellectual Property.