All Talk and No Action Wednesday, October 8, 2008

From what I have read and known, it's easier for Tech Ventures and Ideas to avail VC backing and expertise.

Why so?

A fresher venturing into his first business shall receive more support if his idea is related to science & technology/Online Marketing/Design.

Are non tech related projects more cumbersome? Riskier?

Don't VCs see value in Hospitality/Food/Publishing/etc…?

Yes, funding a Google and it's large scale impact on Society is gratifying.

Yet, wouldn't a home-made food for pets, self publishing, retailing, catering, mobile spas bring about enough cash flows?

In my mind, the only reason I see for more tech related backing is - Low Investment.

Even if the venture were to fail, the losses wouldn't be monumental…

Now, I could be wrong here.

Hence, would like more thoughts from Abhi, India Unbound, PsW, Dhawal, Yogesh and others who belong to/are associated with the coveted field of Technology…!


PsW said...

sorry...taim nahin hain...
kisi aur ka darwaza kat kataon please...

let the tech people work and try to make up for all the mess that your IB's have created.. :P

india unbound said...

It is true, that tech start ups have received maximum funding in the last few years(Refer Pg 3 of this report for data on US, for last quarter More information here : but this is because the sector is still in initial stage and we are witnessing a lot of innovation here. VCs generally fund an idea if it is really different as failure rate in start ups is about 95%. They feel that only a different idea can generate returns of around 100% on their investment in initial years.

One can say, initial cost is not the only reason but yes, one of the strong reasons as due to less requirement of capital, VCs can take many bets which wont be possible in sectors which are capital intensive. But then today, Green Energy sector is the next hot favorite of VCs after IT. It requires a lot of Capital when compared to IT but VCs know that this sector is also unexplored and due to prevailing concern for global warming and energy security, they find this sector highly attractive despite being capital intensive.

In sectors like publishing, food, hospitality etc you will receive fund if your business plan is indeed hatke. But we don’t see many new ideas in these sectors which have the potential to give high returns, unlike in Software/tech which is highly unexplored. VCs feel it is worth wile to invest in a hundred duds in pursuit of a “Google”. Unfortunately, other sectors do not offer such opportunities.

If you wish to start a normal restaurant or a publishing house,where expected cash flow is not very high, why would a VC invest?? He will rather invest in a similar established business, which would be much more safer than a start up.

Remember, the main objective of VCs is to get high returns on their investment and not to fulfill your dreams.

Probably more on this later..

Yogesh said...

i agree with PsW

Deepak said...

So damn simple, Ideas that worthy of persuing always get funded, whether it is tech related or not.

I disagree with the unbounded Indian, who seems to be bounded by only the thought process of the author, agreeing to everything that is said.

Please unbounded Indian, refer to:

I can understand where the author is coming from, just because her out-of-the-world ideas was simply too out of the world, she did not get funded, now what is easier to blame the VC fund or self, I think its the VC fund.

Unbounded dude, please stop copy-pasting and telling people what we already know. You sound like my coveted, beloved, ancient professor Mr. Purohit.

Focus on the ideas, money will follow. Take my example, even though I come up with the silliest of all ideas, I will get funded by the author ;-)

India Unbound said...

@ Deepak

It seems there is indeed darkness beneath the lamp(Deepak). If you read my reply again and not just the first two lines, you would realise that I have actually disagreed with the author.So the link that you pasted did not tell me any thing new and you need to act on your unsolicited advice. Stop copy pasting things that we already know.

Infact if you really want to refute the author with hard facts and not vague articles which talk about some instances of VC funding in non tech sectors check this