Venture Investing in India? Think Twice.

Abstract

Of late, a number of major U.S. VC funds have shown active interest in investing in India. Based on primary research involving major U.S. funds, the authors believe this interest has “bubble”-like characteristics. This article presents evidence to suggest that: 1) new investors are likely to exacerbate the existing capital overhang; 2) the limited supply of deals poses challenges; and 3) returns expectations are out of step with historical performance. Based on their observations and experiences, the authors have also outlined possible operating and investing philosophies for India that are likely to improve the chances of a successful investing experience.