Derek Newberry

Record VC Investment In India Good for BOP/Clean Tech Sectors

Just as a report comes out confirming the obvious- that SMEs in India have a hard time performing because they don?t have the funding they need- Business Today declares (subscription required) that the private sector is picking up the slack, with record venture capital flooding the country.

The article is a bit lengthy, but well worth the read as it explores one of the most important current trends for Indian business. In this climate, 44 American VCs are looking to invest around $4.4 billion in companies- money that will almost certainly be forced to move outside of the traditional IT sector to develop budding industries including green technology and education.These are two of the ten sectors that BT identifies as particularly attractive for investors, a sign that India’s economy is diversifying and that small startups in a variety of industries will benefit from the new wave of financing entering the country. What is needed now are tools that ensure this new capital will reach BOP producers who tend to fly under the radar of mainstream VCs.

The best way to do this is through organizations with business incubator models that mentor and provide management assistance to these small companies to prepare them for mainstream investment. For full disclosure, I should note that the Indian branch of my organization that provides such services receives mention in the BT piece for channeling funds into clean tech.

This trend has long-term potential unlike the flighty capital that has tended to swarm into and out of emerging economies as in the past- so what is different this time around? According to BT, ?The difference is, India as a consumer market has been recognised.?