NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Tuesday, July 26, 2016

Mumbai: The venture capital gold rush to India that began with Tiger Global Management’s purchase of a slice of Flipkart in 2010 ebbed five years later, ending in cash crunch, valuation cuts and many shutdowns in India’s start-up landscape.

Leaders of the last surge such as Tiger and Softbank Corp. have since largely pulled the plug on India, but the promise of an online retail market that UBS Group AG expects to touch $48-60 billion by 2020 and Morgan Stanley sees at $120 billion has attracted a new set of brave souls willing to bet their millions.

The relative lack of interest from established venture funds since the peak of 2015 has also opened up space for these investors, who missed the bus in the earlier rounds of fund-raising.

These investors did not burn their fingers in the three waves of venture capital that swept India. In the first era, until 2009, global venture capital firms such as Sequoia Capital and Accel Partners pretty much dominated the scene. The second era started in 2010 when Tiger took a stake in Flipkart, and followed it up with six more investments in the company.