Vinod Dham: Cost to launch a startup drops
Apr 04 2014
Interview | Vinod Dham, executive MD, IndoUS Venture Partners
With the recent advent of cloud computing and data centre technologies, the cost of launching a startup has dropped dramatically, enabling entrepreneurs with innovative ideas to launch their companies with very little capital. Also, with the worldwide popularity of various social media platforms today, an entrepreneur can test a product, create user awareness and build scale with very low cost, never before possible.
Can you recall your own early days as a prospective entrepreneur in the US?
Being an entrepreneur was a very thrilling experience. It was like bungee jumping or riding a roller-coaster. The working hours were insane and I would spend sleepless nights solving tough issues — be it technical, personnel, raising capital or signing up customers. Now, as a promoter/investor, we are more disciplined about raising capital, choosing the segments for investments, allocating capital, betting on a new idea and team, determining valuation and calculating probabilities for exit outcomes. As an investor, although we are spared the day-to-day grind of running the company, we have to make critical judgements on the company’s progress and pivots, coaching and guiding the entrepreneur through their challenges and ensuring adequate capital.
Regarding the exit timeframe, how is it for angel investor and venture capitalists in the developed markets?
The exit time in US is getting back to five to seven years after longer cycles post dotcom. In India, the exits of funds, starting 2005-0,6 have been taking longer to materialise due to slow growth of internet penetration and broadband availability. With recent progress in 3G and upcoming launch of LTE, connectivity will no longer be a bottleneck in achieving faster ramp ups and revert to normal exit timelines.
For most people, startups means IT/software. Can you list a few non-IT sectors that show immense potential for start-ups?
Today technology is ubiquitous. There is no segment of our life where we are not consciously or unconsciously touched by it in everything we do. Even the non-IT sectors use technology to gain efficiencies and cost. An example of rapidly emerging non-IT sectors for startups are healthcare, life sciences and alternative energies.