Mumbai, Oct 30: Unlike in the past, many dotcom companies are rushing to the venture capitalists seeking more funds. But, on the other hand, the latter are shying away from funding as instantly as they did a year ago citing so many reasons which seemingly not bothered them earlier. "The sad part of this rush is that most companies, who want to come to the market with their start-ups, come at a very early stage with no proper plan or perspective. And in the process, they get beaten up," Mr Sudhir Sethi, director and chief representative, Walden International Investment Group said at conference organised by The Indus Entrepreneurs (TiE) on Monday."These ventures are not so grown up to attract capital, and there is no justification that they look for investment from outside," he said adding that it was not worth investing in start-ups, with a capitalisation below Rs 20 crore. Unfortunately, today most companies in the market are not ideal players to be in.
Mr Suhas S Patil, chairman & ceo, Tufan Infotech (I) Pvt Ltd said: "Matching of start-ups and venture capitals is very important. If a promoter wants funds for his project, he should come out with a transparent approach in order to allow the VC to value the project."
However, while looking from the investors' point of view, Mr Vishnu Varshney, president and ceo of Gujarat Venture Finance felt, lack of corporate governance, poor accounting standards and lengthier legal system, difficult due diligence, unrealistic valuations, inadequate management depth, promoters' control, get-rich-quick attitude, poor technological and market evaluation, bureaucratic meddling and rigid official attitude etc., are major constraints ruling the start-ups.
Nevertheless, Mr Sudhir Sethi said marketing India Inc.could attract global venture capital funds by opening offices abroad. This will increase activities in India too, he added u And Indian corporates and financial institutions could also be allowed to invest in global VC funds, so that, their earnings could be brought in.
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