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Indian ecosystem is still nascent, says Ernst & Young Exec

March 26, 2007 · Posted in Entrepreneurship, Tech tidbit

Gil Forer, global director of venture capital and IPO initiatives for strategic growth markets at Ernst & Young Global, spoke to DNA Money on Indiaâ€™s place in the venture capital world. A few excerpts from the interview:

India is still at the beginning. Almost $750-800 million were invested in VC-backed companies in 2006. The ecosystem here (India) is still developing. So we have seen foreign VCs coming in. We have seen more companies being funded. Some companies have seen some exits already. What we saw few years ago in China , We see it here now.

What can be done to create a vibrant ecosystem?

We have various criteria namely, 1) capital â€” which includes venture capital, private equity; 2) intellectual capital including entrepreneur of R& D centres of companies such as Microsoft; 3) Spirit of entrepreneurship in terms of willingness of individual entrepreneurs, acceptance of failure, acceptance of individual worth. All these must be factored.

We also look at infrastructure in terms of sufficient number of law firms and physical infrastructure, companies exports without lot of bureaucratic hurdles, the legal environment whether intellectual protection is there, tax issues and so on.

Overall the place should be a nice place to do business. California is what it is today because of its environment. Itâ€™s difficult to create entrepreneurship skill in a place that is difficult to live in and the last thing is the market. Also, large domestic markets play a crucial role in creating a vibrant system. One should judge them on scale of five on each parameter. Iâ€™ll leave that to you. You will agree as an emerging market, you (India) have still not yet reached optimum levels on all these parameters.

Read the rest of the interview here.