Tuesday, 2 March, 2010

Businesses that cater to India’s domestic growth will attract VC capital: Sanjay Anandaram

Are venture capitalists battling the global recession blues or feeling optimistic about the new opportunities for investing?
In an online interview to Jayarama Emani (JE), founding partner of JumpStartUp Venture Fund, Sanjay Anandaram says “businesses that cater to India’s domestic growth will attract VC Capital. Sectors like education, healthcare, travel, retail, financial services and entertainment that are around the consumption of an Indian consumer will find favour with Venture Capitalists.”

The Interview:

JE: In the recent past, did you ever feel that global recession is impeding globalization and was undermining the strength of global technology innovation and entrepreneurship? If yes, when is this likely to change?
Sanjay: I don’t think “globalization” is getting impeded in any manner, just might slow down a tinge in certain sectors but the march forward appears inexorable. Global technology innovation and entrepreneurship will not be impacted.

JE: During recession, does it pay to be either a very early-stage investor or a very late-stage investor?
Sanjay: Early stage as then you have the time, not to speak of across the board lower costs, to develop the company’s offerings. Also customers then will only buy and pay for stuff they really want!

JE: Firms are now looking at the whole world in terms of their investing priorities. The world has gone global in venture capital and the firms are adapting their strategies accordingly. Do you see any specific sectors or region (country) getting benefited out of this recession as far as VC funding is concerned?
Sanjay: India certainly has been relatively shielded from the so-called global recession since India’s growth is largely domestic consumption led. Hence businesses that cater to India’s domestic growth will attract VC capital. Sectors could be around the consumption of an Indian consumer namely, education, healthcare, travel, retail, financial services, entertainment etc. Technology usage to drive efficiencies will enable the creation of scalable businesses.

JE: How do you think the entrepreneurs should position themselves in these difficult times as compared to the past?
Sanjay: Well, it will be a focus and return to basics. Low costs, real solution to a real problem, a delivery and customer support model that can operate efficiently at low costs at a price customers are willing to pay. Nothing out of the ordinary here but a grim reminder of the importance of staying focused.

JE: Should entrepreneurs come up with viable propositions, do you think VCs still have the means to raise the funds as also invest them courageously in these market conditions?
Sanjay: Well, that’s what VCs (at least supposed to) do! It is up to the entrepreneurs to convince investors that they have a compelling and winning proposition.

JE: You have been a VC for quite sometime. Can you throw some light on the adjustments that you made vis-à-vis investment strategy over the years or did you wait for things to happen?
Sanjay: The core approach of staying focused on early stage companies remained constant.

About Sanjay Anandaram:

Sanjay Anandaram has over 20 years experience as a corporate executive, entrepreneur, venture capitalist and advisor-mentor. He co-founded JumpStartUp in 2000, one of the earliest US-India cross-border early stage VC funds. He’s associated with several startups (eg, RedBus, Fonemine, Ozone Media, Instahealth and Maya Organic, a social entrepreneurship venture) and two early stage Indian VC funds, Seed Fund and with Ojas Ventures. Prior to JumpStartUp, Sanjay co-founded Neta, a VC backed Silicon Valley startup that was acquired by Infoseek/Disney. He spent several years at Wipro (NYSE;WIT) and played key roles in the setting up and establishment of pioneering cross-border business models in product engineering, systems integration and distribution spanning operations in India, Africa, Middle East, East Asia and the US.

Sanjay has been writing on entrepreneurship and venture capital for over 10 years now. He also co-founded Venturekatalyst, India’s first e-zine aimed at entrepreneurs. He’s a frequent speaker at academic institutes and industry events and is involved with IIMB’s NSRCEL, TiE Bangalore and Nasscom in driving entrepreneurship. As adjunct faculty, he takes a course “Business Plan Workshop” at the INSEAD business school (Singapore campus).

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