First, most large global VC firms have created India-specific funds over the past five years, which has led to a huge pool of investment capital in the market. All of the people to whom we talked feel that there's far too much capital chasing too few strong entrepreneurs, teams and ideas in India. The other implication though is that this is a great time for entrepreneurs in this market because startup capital is relatively easy to raise if you have a robust idea and at least a basic understanding of the market.
Another common theme from our conversations was the value that VCs place on U.S. work experience and education. We heard that many Indian entrepreneurs still have a "chalta hai, this is the way things are in India" mentality, so people who bring typical American traits of obsessiveness, urgency, and even simply the ability to follow up have a huge advantage in this market. I found this a bit surprising given my experience at McKinsey India where everyone was obsessive and everything was urgent, but this is what we've been hearing. We’ve also heard that there’s a lack of strong product management and business development talent in the market, in contrast to the abundance of strong technical talent.
The final theme we noticed is that many of the top portfolio companies of VC funds here are clearly modeled after successful businesses from the U.S. transplanted to India and sometimes tweaked for cultural differences. One great example we read about in the Economic Times a few days ago: Ink Fruit is India's Threadless, an online t-shirt business driven by “crowd-sourcing.” Definitely time to start combing the U.S. for models that we can bring to India!