VC Industry Evolution International Perspective

1
VC Industry Evolution - International Perspective

• Nasscom Product Forum
• December 10, 2003
• Bangalore

2
US VC history

• Initiated by Wealthy families (Bessemer,Rockefelle
  r..)
• SBIC programme of the Government in 1960s
• Pension Funds, Foundations, Insurance Companies,
  Family trusts invest in this asset Class
• Active participation of successful entrepreneurs,
  senior corporate executives
• Annual angel funding estimated at US 20 bn
• More than 60 is in Information Technology
• Silicon Valley absorbs 1/3rd of VC 2 is New
  England
• Currently invests around US 20 bn annually (peak
  US 100bn)

3
Taiwan VC history

• VC era from 1983
• Significant government initiatives tax
• Govt.seed funding of NT 800m in 1985
• MultiVenture,HQ,Walden were initial VCs
• Manufacturing core competency
• Strategy of commoditising hardware products
• Significant Domestic capitalCorporate/Banks
• Leveraged US connections

4
Israel VC history

• Early beginnings in 1985 One fund till 1991
• Military research, universities, existing firms
• R D orientation
• Office of Chief Scientist provided grants to over
  1000 start-ups
• BIRD programme supported 400 projects
• US 100m YOZMA fund
• Over 100 companies listed in Nasdaq
• Very vibrant VC industry primarily due to foreign
  capital

5
Indian VC history

• Began in 1986 - TDICI
• Several state sponsored institutions
• Active support of multilateral FIs
• Private VC firms made beginning in 1995
• Shakeout - 2001
• Large economy and hence broad based and not
  limited to high tech potential to grow in all
  sectors
• Vibrant domestic capital markets
• Requirement for early stage capital is poorly
  serviced

6
Drivers of VC industry growth

• Affiliation with US markets
• Presence of MNCs, talent pool and defense
• Government sponsored VC programs
• Domestic capital sources
• Domestic financial institutions
• Successful Corporations and entrepreneurs
• Favourable government policies
• Private fund managers

7
Venture Industry Size
8
Comparison
9
Suggestions

• Make domestic capital available for seed/early
  stage
• Larger corporations should be encouraged to
  contribute to VC industry growth
• Successful entrepreneurs should play a leading
  role
• Government initiatives to spawn entrepreneurship
  / VC industry Funding and implementation
• Development of private fund managers
• NASSCOM can support development of VC industry
  with focus on
• Government policy funding
• Member education

10
References

• www.nvca.org
• www.tvca.org.tw
• www.ivc-online.com
• Papers by Rafiq Dossani (Stanford University)
• Papers by Morris Teubal (The Hebrew University)
• www.indiavca.org
• www.redherring.com
• Other secondary sourcesJumpstartup estimates