Mr Daniel Schwartzis the publisher of the Asian Venture Capital Journal (AVCJ), the monthly which focuses on Venture Capital and Private Equity markets in the Asian region. He is currently in the country to conduct a conference - 2000 Asian Venture Forum/India - Can Dotcom Decca Best Silicon Valley? Dwelling on the challenges faced by Indian IT, Mr Schwartz does not disguise his message to Indian start-ups - Reduce reliance on "The Gods from Silicon Valley". Excerpts from an interview with Priya Srinivasan follow.To begin with, could you tell us what the title of the seminar being held by the AVCJ in India stands for?
"Can Dotcom Decca best Silicon Valley" actually stands for the challenges faced by Indian IT businesses when it comes to competing with Silicon Valley which is currently the epicentre of IT activity. Decca stands for the Deccan region - encompassing largely the West and South of India which dominates the Internet and Technology activities in India.
What according to you are the key challenges faced by Indian IT when it comes to competing with Silicon Valley?
The domestic Indian IT industry has been catalysed to a large extent by wealthy individuals of Indian origin who are based in the Silicon Valley. But my observation now is that these individuals are once again getting caught up with their own projects in the US, besides it is difficult to mentor businesses from 10,000 miles away. The Indian IT industry is soon going to find itself on its own and it will have to find its own leadership. The other challenges for Indian IT is to move towards Systems Design and architecture from one that specializes in coding. Also the Indian government should relinquish control over this space.
Where do you see the new leadership in India emerge from?
This leadership and mentoring has to come from people who live, work and run businesses out of India and it is their ability to train Indian entrepreneurs that will shape the Indian IT industry. As of now there are few mentors domestically and that is the real weakness here, you cannot rely on Gods from overseas for ever.
We have been seeing a disturbing trend in the Venture Capital industry with Thought-to-be-done deals suddenly falling apart, VCs seem to back out even after terms sheets are signed, what do you make of this scenario?
India is not alone in this, we have seen cases where the entire documentation has been completed when the VC backs out. The golden rule is that - the one who has the gold rules - so until the money is in the bank, the deal is not closed. This trend is seen partially because the VCs are realising that they need to invest more money in keeping their existing companies alive. As for the renegotiation of deals, VCs have realised that the earlier valuations made no sense but they were forced to pay, though they were not happy with the valuation.
Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.