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Web 2.0 not exciting enough for VC’s
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Well though the youtube story in the US and the popularity of orkut and orkutting may have lead to a huge number of start ups starting up in the web 2.0 space in India it has not had an effect on the Venture capitalists in India. Infact accoring to the VC’s they are more excited by transaction based startups i.e. travel, jobs, ticeting etc.
Deepak Kamra, general partner, Canaan said "We are closely looking at start-ups in the Internet and product development space. Even if the models are cloned from the West, we insist on a high level of localisation." He, however, added that Web 2.0 companies are not on his "priority list". "Yes, there’s a frenzy in the US over these models such as YouTube clones, etc. However, we are excited only about transaction-based models."
According to some VC’s tepid interest in online ventures could be attributed to lower level of internet penetration in India. It is estimated that total Net users in the country is around 35-45 m. Sridhar Mitta, CEO, e4e India and part of The Indus Entrepreneurs (TiE) network feels that infrastructure i.e., internet will be the key issue in scaling up the business of these ventures.
Kanwaljit Singh, MD, Helion Ventures, says that there is no question of any slowdown in the investment of these companies and it has been evaluating a lot many proposals. It is just that the lower net user base may not actually make it a very scaleable business as of now.
Well this may not be a great news for all the wannabe web 2.0 entrepreneurs who probably are ad would be looking for funding to scale their businesses. More power to them because bootstraping a startup for a long time is a battle. Any web 2,0 entrepreneurs reading thi should go and buy Art of the Star by Guy kawasaki a fantastic book for any startup entrepreneur.
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