In the US someone with a promising technology idea can easily get access to financial backing, and this is precisely what has been missing in India's innovation landscape.
The most exciting development in the last one year in India's technology landscape is that things are changing and early stage funding is becoming available.
Angel investors, who invest in a business even before it has proved itself, have arrived in India and are actively looking around. And behind them are venture capital firms, which finance a business in the subsequent stage.
The latter are back after they had withdrawn into their shells when the techbubble and the telecom investment bubble burst during 2000-01.
Giving the angel investors company is a string of stalwarts such as Pramod Bhasin, Jerry Rao and Raman Roy who have amassed rich experience and wealth over the years and are looking at budding entrepreneurs.
Consumer Internet, mobile technology and highly-focused outsourcing firms are currently the favourite sectors among early-stage investors.
Says Sandeep Singhal, MD in India of Sequoia Capital, one of the foremost VCs in the world, "This is the age of entrepreneurship in India, particularly for the professional class of engineers and managers," he notes.
According to data from Venture Intelligence, a research service focused on private equity and venture capital activity in India, the first nine months of 2006 witnessed 43 investments in early-stage technology companies worth $157 million.
The corresponding numbers for the previous two years were 20 deals worth $115 million in 2005 and 13 deals worth $82 million in 2004.
"Over 80 per cent of the investments in the early-stage tech segment in 2006 have come from Silicon Valley or Silicon Valley-linked firms," said Arun Natarajan, Founder and CEO of Venture Intelligence.
"While Indo-US cross-border investments i.e., companies headquartered in the US with R&D/back-office operations in India -- used to dominate early-stage investments in earlier years, in 2006 companies targeting Indian consumers are attracting at least as much capital as cross-border firms," Natarajan added.
Rao V Remala, who was among the core team to write code and give shape to the ubiquitous Microsoft Windows programme, recently became an angel investor in S7 Software Solutions, a product and services-based company specialising in software, which helps applications run across platforms.
"Many successful people want to tap the market today, given the tremendous opportunities unleashed around the globe that they can take advantage of while being in India," notes Neelam Dwivedi, co-founder, Proteans, Inc, an outsourced product development firm, which secured initial funding from Karnataka IT Venture Fund.
Band of Angels, which has a membership of around 40 technology entrepreneurs who are propagating early stage funding, have recently set up shop in India.
