Showing posts with label Indian VC. Show all posts
Showing posts with label Indian VC. Show all posts

Friday, October 31, 2014

Why did Scott Adams give up on Venture Capital?

More than the brilliant humor & the tough to ignore desi-connect called Vijay, what caught my attention in today's DILBERT section of Times-of-India was the date of strip itself viz., 1.20.09 - Now that's pretty dated even for an average Indian newspaper that's stuck in a time-warp when it comes to being current on syndicated comic content.
My subsequent query on the website revealed that there're no strips on either 'venture capital' or 'venture capitalist' after the above strip of 2009 – Whoa! If that isn't disillusionment what is? particularly considering how the age-old crib of 'VC model being broken' got a lot more traction post the recession-wreaked 2009 and that would've meant a lot more meat for Scott to chew on!
I wonder why Scott gave up on this wonderful pun-amenable character called VC so very unceremoniously.
VC = Vijay = No good?
Of course I did search for more strips of my compatriot Vijay too. It was rather interesting to note how this chap’s tagline/ descriptor changed from "Vijay, the world's most desperate venture capitalist" in 2005 to "Vijay the venture capitalist" in 2008 to "Vijay, the world's worst venture capitalist" in 2009 ---- Despite my respect & awe for Scott Adams, I can't help but wonder if there's a botched-up fundraising behind this obvious gripe.

Saturday, December 21, 2013

A suitably bootstrapped perspective

As someone who routinely wears boots under Levi’s 511s, I understand the sheer utility of those small loops called bootstraps - Sramana Mitra’s high focus on an entrepreneur bootstrapping the start-up in her book “Seed India -How To Navigate the Seed Capital Gap In India (Entrepreneur Journeys)” helped me appreciate the criticality of this aspect in the Indian venture funding context.

The book’s USP is its brevity and the matter-of-fact, blog-like style but what keeps your interest on is the verbatim reproduction of the interviews. Spurred by the author’s knowledgeable querying, the interviewed entrepreneurs come up with some honest reflections & very useful insights into their successful entrepreneurial journey. Some statements though come across as anachronistic, particularly when Sachin Bansal of Flipkart seemingly undermines the adaptation, penetration & potential of digital books and affordability of e-readers in India - the fact that I was reading this book on my Kindle Fire HD made the assertion even more ironic.

While it is a welcome trend that Indian start-up stories are getting written about, I once again can’t help but notice that the term ‘start-up’ is gradually getting equated with IT/ITES/ Cloud enterprise.  Most other enterprise categories such as biotech, green-tech are clearly missing out being written about as interesting case-studies since they can’t quite compete with a typical cloud based start-up which (can..) starts generating income within few months of existence – As Sramana did admit passingly, the logic of bootstrapping one’s business is a very different ball-game if the start-up product offering is physical (~biotech) as against being virtual (~SaaS)

Coming back to the book, I felt that what was perhaps intended to be showcased by the author but not quite articulated is an observation that ‘bootstrapping an early enterprise’ comes quite naturally to Indian entrepreneurs given the culturally ingrained reluctance to diluting ownership/ stake of a start-up business early on & the practical jugaad (in a fair sense) mind-set of sailing in two boats before hitching on to the one of choice.

Considering this being a cluster/ market dominated by such lean business ethos & relatively more fiscally-conservative entrepreneurial attitude which by default de-risk the investor’s moolah, one’d have expected India to be a hot destination for an alternate asset fund manager looking for a safe-harbour for her/ his precious dollars, but quite obviously it is not. Of course it is also apparent that there isn’t enough fish in the pond for any LP to develop a serious strategy betting on Indian start-up scene & perhaps the only way to make this ‘LP-friendly entrepreneurial ethic’ work in India’s favour at scale is to seed more & more promising enterprises, bootstrapped or otherwise.


Just wondering.... the Global LPs could be a lot more interested if the Indian VCs claim to be ‘Conservative’ rather than being ‘Contrarian’ in their choice of deals :-)

Wednesday, July 17, 2013

There's some traction (in exits') for Indian VCs & that ain't bad!

Expectedly, there was some excitement & some skepticism over the recent acquisition of redBus by Ibibo. My comment on one such recent article "Is the redBus exit really good for the VC ecosystem inIndia?" on StartupCentral is as follows;

My comment:
What you have said above sounds (to me) like;
If only the ‘sheer-return achieved on one exit’ by the VC is looked at in the broader context of ‘performance of the fund’ as such (disbursed funds?) rather than merely as a nX return on investment made into that particular company, only then will the overall picture emerge.
Now, just because you mentioned 200mio USD fund in your article, I wish to know if I can assume that one of the three VCs (or all three as an average) who disbursed funds of ~200Mio USD across past 7 years among multiple portfolio companies has hitherto managed only one attractive return of ~15-20X? (of RedBus) & this sheer return still doesn’t amount to being anything substantial to the LPs from whom the 200mio fund was raised?
If the answer is yes, I agree with you that for the Indian VC universe ‘Dilli abhi dhoor hain..’ (loosely translates as ~miles to go before resting on ones' laurels...)
Of course I’d also be cautiously optimistic when I say that if only the VCs that invested into RedBus used a similar good-sense & judgement while identifying, nurturing the other portfolio companies within this 200mio fund, then it is likely they’d still see some more good exists, including some from an IPO even.
Overall I guess there’s some traction & that aint bad. 

Monday, July 1, 2013

Cipla Ventures - What's the real story Gen-3?

Greed for quality & comprehension makes one less effective & less productive.........
........... Stash away those cudgels people, this is NOT about pharmaceutical manufacturing, this IS about my realization after a month of sub-par blogging that resulted in my number of posts going low (just one article to be precise in June 2013!) and the number of views I get per a month hitting the nadir! - A promise to myself... will try to type out a few "casually turned out" articles every now n then, instead of generating it through my oft employed time-consuming approach of Mull-it-over-for-a-week-Type-it-on-Word-Edit-it-as-though-HBR-were-publishing-it-and-finally-Paste-it-on-the-blog....... Spontaneity ain't dead yet!

Now the REAL topic...

The recent news of Cipla charting new course to achieve a $5 billion revenue in next ten years caught my attention & got me thinking.... Not because a 10 year objective as this is anything novel, but the simultaneous creation of a dedicated investing arm Cipla Ventures, towards this vision, is what interests me. 

Now again, what's so novel about corporate venture capital? its's been around for some time and the trend is bound to catch-on with whichever company that's sitting on surplus cash reserves jumping into the fray if not anything else, as someone said (Super LP??) for the blood & gore and the adrenalin rush that venture investing & enterprise incubation gives.

What interests me is.... 
........ the brief agenda of this arm of Cipla, as reported by Economic times, that says will "weigh the prospect of investing in companies from start-up hubs like Boston and London among other places, in areas such as biotechnology, medical devices and new chemical entity

What interests me is.... 
....... the expansive & prophetic way in which the new CEO Subhanu Saxena says "Out of the five or six bets I place, only two or three need to pay off"

What interests me is.... 
....... what is this "pay off" for which Cipla is ready to take "sensible risk", a novel term for a generic Indian company that has taken the traditionally low risk option of staying close to the home turf?

What interests me is.... 
...... what key takeaway Saxena is walking away with from Novartis & bringing to Cipla?

Let me be clear, I am not insinuating anything unethical here nor I am attaching ulterior motives to a darn-clear writing-on-the-wall business opportunity, all I am doing is trying to get to the heart of matter as to what will Cipla gain eventually through these investments..

Two theories that strike me right away are as follows;


The multiple niche stakes & thereby the 'possible' control on the licensing /sale of the pipeline candidates & technologies of the portfolio companies in the NCE, Biotechnology & Diagnostic space will potentially help Cipla negotiate/ barter generic deals with the big pharma companies whose drugs Cipla is/ will/ would aggressively pursue to market in the US & European markets

Will this fly...? despite the generous window of hit-miss offered by Saxena, this is an opportunity completely out in the ether & my guess is as good as Cipla's :-)


Before I am clobbered for suggesting India's most nationalistic  private pharmaceutical company would sell-out, let me remind that no one's above liquidity & no company is unattainable in this corporate game. Let's also remember that the new leadership of Cipla is, surprise, surprise.... of all places, from Novartis, the bête noire of Cipla in many a litigation?? - Let's also remember that the new leadership of Cipla in US & EU is Ex-Teva... the generic behemoth that can make big-ticket acquisitions every now and then (read: $6.5 billion Cephalon; $7.5 billion Barr et al..)

Will this fly...? Of course it'll - the lure is the access to a 1.24 billion strong Indian market.

Anymore theories? 

Thursday, May 23, 2013

Nobody’s saying no to India’ – phew, that’s a relief...

The survey of a few global LPs by VCCircle that was intended to understand 'what a LP wants from Indian PE managers" but actually feels like "why a global LP wouldn't want to put his best bucks in Indian PE" threw up some expected & some strange surmises, but nevertheless makes an interesting read –

The link to the article is below & below that is a repro' of my own comment on the article;

My comment:


Interesting surmises!

What makes the takeaways less validated however is the lack of disclosure or at least a categorization of the LPs surveyed**. This gap I felt more acutely for a few like the question # 9 the response pictorial of which indicates that 50% of LPs surveyed will put money in PE/ VCs that're focused on investing in growth-stage enterprises – this averaged-out response doesn't allow one to assess if this is the response of each LP sub-set falls within this range or if some LP sub-sets deviate from the mean significantly.

I also felt a lot of the questions were overtly leading & that could skew the responses in favor of the inherent bias/ prejudice in the question (for e.g. 10 & 11..)

And yeah, the sliver-lining… It warmed my cockles that LPs have acknowledged of the promise of Healthcare Industry in India & the candid confession that ‘no body’s saying no to India’ – phew, that’s a relief.

**I realize it’s possible this can be done still from the data available OR it has already been done… only I couldn’t see it in the downloaded report.  

Sunday, March 31, 2013

Factors Influencing the Global Prospects & Investor Attractiveness of Indian Pharmaceutical Industry

Most ‘Indian Pharma Outlook’ reports from the likes of McKinsey & PwC  almost exclusively focus their policy & regulatory scenario call-outs on aspects that bear an impact on entry & exit strategies of global pharmaceutical companies - which is understandable given they form the healthcare client-base of these consulting organizations. Not much information is however available when it comes to information on the policy & regulatory landscape within India that has a bearing on the commercial prospects of Indian pharmaceutical companies globally & one that can influence the investor sentiment/ emotion driving it.

Inspired by CNN Money’s beautifully minimal ‘Fear & Greed Index’, I set about categorizing and analysing the three most debated India-specific pharmaceutical policy & trade issues in the past few months. Thus categorized as low, elevated & high risk, these three issues broadly mapped out the boundaries of factors influencing ‘Global Prospects & Investor Attractiveness of Indian Pharmaceutical Industry”.

Lack of candor in acknowledging a local & global menace of counterfeit drugs

FDA website says “Counterfeit medicine is fake medicine. It may be contaminated or contain the wrong or no active ingredient. They could have the right active ingredient but at the wrong dose. Counterfeit drugs are illegal and may be harmful to your health” – While US Pharmacopeia broadly uses the same definition, it extends the scope of fake to the drugs that are “deliberately mislabelled” and with “fake-packaging” - Now, while the definitions do not say so, it is an inferred & accepted norm within the regulatory, federal & industry circles within USA, EU most other developed economies that any drug approved for a certain geography/ country if found to be distributed, marketed in another geography where it hasn’t obtained any approval makes that drug a counterfeit too.

In what could be explained within ten lines of text as above & given this is a definite public health issue, it’s confounding how so much energy is spent by so many espousing interpretations of varied hues on what doesn’t amount to a counterfeit. A recent news item in TOI showcases how a whole country’s credibility could take a beating with misinformed defence of an ill-articulated official position. The gentleman in the referred article states "Counterfeit is essentially an intellectual property issue referring to falsely packaged products that violate trademarks, but it is not necessarily about the quality of the medicine" - almost affecting that a counterfeit with a real API a lesser crime" – If this is indeed the official position of Indian on counterfeits, it sure needs work.

Factors at play

From the consumer’s perspective it could be Cost differential of counterfeits vis-à-vis’ branded formulations & No-hassles (online) access of Prescription drugs. From the counterfeiter’s perspective, it’s all about monetizing the existence of a vast ill-informed & gullible market 

& then there is this legacy of distrust & malice……

While there is/ was a definite basis to suspect & investigate role of India connection to the counterfeits, for a larger part of the last decade FDA, PhRMA, SOCMA & EFCG and the various allied task-forces went on an extended witch hunt, not entirely without dishonourable motives (read: SOCMA, EFCG; NA/ EU manufacturers losing out to outsourcing to India), for Indian knockoff offenders & in the bargain tarnishing the image of many ethical Indian organizations that in some instances were completely unaware of their product getting trans-shipped through parallel/ secondary import channels (ref. the PhRMA report on counterfeit drug statistics quoting 2008 data)

*Image courtsey: from a Forbes article about Indian companies adaptng the mobile verification systems in a big way

Pros & Cons

ZILCH: There can absolutely be nothing positive about;
  • A fake drug with a spurious drug &/OR
  • A counterfeit with a real drug &/OR
  • A true generic in an unauthorized territory 

CREDIBILITY: Any knee-jerk reactions such as the above, based impractically on a painful legacy, may end up sounding like a tacit Indian support to counterfeit industry and will severely harm the genuine promise Indian generic industry holds and is pursuing

PUBLIC HEALTH: The above cynical approach to addressing global concerns on counterfeits can easily get rubbed off within the Indian context & the consequent confusion can be used by counterfeiters to take root & rot the whole public health system within India

NET IMPACT ON INDIAN PHARMA:  This is a no-brainer really, with zero positive & two negatives; this is a present & imminent danger to the credibility of Indian pharmaceutical Industry.

What could Indian Pharmaceutical industry & policy makers do to address the above aspects/ issues?

Ironically a lot of Indian response to any dialog on counterfeits still seems to be based on the sole concept that some of the "real-API counterfeits' are traceable to India & many a time, without the manufacturing company realizing so  - while this may still be a relevant grouse, it still cannot be the sole discussion point whenever someone mentions counterfeits.
From a global perspective, Counterfeits, even if they use “real API” should still be eliminated from supply chain owing to the following consequences* (adapted from a USP DQI presentation) of their existence;
  • Diminished trust in health care system
  • Waste of financial resources
  • People go untreated—leads to prolonged illness or, possibly, death
  • Sub-potent treatment can lead to resistance and treatment failure

India Pharma Industry, policy makers should shed the baggage of the hurtful past & acknowledge explicitly to the world community that the above concerns are applicable for control of counterfeits on the Indian soil too & hence both internally & externally India will deal with all dialog on counterfeit medicine FIRST as a public safety debate & THEN as a trade debate.

Looking ahead

The regulators & industry in developed countries such as USA & EU, UK should also look beyond the greed-driven commerce as the trigger for the existence of counterfeits & acknowledge that the  reasons can be equally economical, triggered by the need for affordable medicine for the outlier population that is neither covered by the state nor by the insurance companies. This aspect is bound to be helped by the current winds of genericization blowing through USA & Europe and this trend will hopefully and naturally topple the cheap counterfeit applecart – Having said that tackling counterfeits should be the primary corporate social responsibility of the pharmaceutical industry worldwide.

The not so surprising enthusiasm for the compulsory Licensing route to introduction of 'copy cats'

Back in March 2012, Natco Pharma opened the gates (or Pandora's box depending upon which side of fence one is..) with their successful bid for the Compulsory License of Sorafenib Tosylate (Nexavar) using the provisions set out in the TRIPS agreement. The recent endorsement of this decision by IPAB seems to have ushered-in the growth-phase of CLs with BDR Pharmaceuticals of Mumbai filing an application for Dasatinib and the grapevine says quite a few as this are lined up in the immediate future, in India & overseas.

While CLs are being looked into seriously by other developed countries too, what complicates it in the Indian context is the sheer price difference that makes the royalty on sales to the innovator a trifling formality and the sheer size of the lost opportunity for the innovator huge (size of Indian population).  The case-in-study being Nexavar again wherein Bayer’s price is 35 times the Natco’s price & the 7% royalty Bayer was granted, wouldn’t even pay for their lawyers fee at the initial sales volume.

Factors at play

Cost effective access to newer therapeutics in India, Compliance with global IPR norms (both prescribed & inferred) and last but not the least, A really big (read: 1.2 billion population) market opportunity, the surface of which has been hardly scratched.

Pros & Cons

SOCIA IMPACT:  The Indian population will have economical access to technologically superior later-date drugs

FINANCIAL IMPACT: Opening up of a new market in India for these newer therapies hitherto not adopted owing to a steep price barrier

CREDIBILITY: The Indian pharmaceutical industry's credibility will take a hit if the trend catches up in a big & uncontrolled fashion - The obvious impact will be a gradual deceleration of outsourcing to India & more specifically withdrawal of contract manufacturing of proprietary drugs in India by innovators affected by the CL (which could be all within a very short-span)

NET IMPACT ON INDIAN PHARMA: At the current stage, I’d believe Indian industry as a whole has more to lose w.r.t. loss of outsourcing pie than the money generated out of the CL drugs.

Also, despite a large price differential & given the drug use in India is still physician controlled & not state-sponsored or paid for by the insurers, the innovator companies are likely to resort to a sustained campaign through physicians to color the local copy-cat as a 'compromised medicine' & thus can significantly and negatively impact the Indian company's anticipated fortunes – Improbable as this may sound, this indeed happened a few years ago in the vaccine domain with the MNCs spoiling the retail-dreams of the local contenders using their sheer financial-muscle & reach to influence the physician** against the local vaccine.

**My daughter’s pediatrician forcefully opposed my suggestion to go-in for a Hep-B vaccine from a good Indian company & insisted that he wouldn't suggest we compromising on the quality of the vaccine and that we should instead opt for the pricier but reliable MNC  - Ironically, a decade later this Indian company was acquired by the very same MNC :-))

What could Indian Pharmaceutical industry & policy makers do to address the above aspects/ issues?

A transparent, public evaluation of the application & a greater scrutiny of the "need"/ "essentiality" of a certain new drug vis-a-vis further price rationalization drugs that have already fallen off the patent cliff.

Possession of validated process for the said drug by the applicant at the time of application to be deemed as an automatic disqualification - to mean, since this indicates that the applicant reaching out to the innovator for a licence has been done without an intent to get one & hence that refusal of a license by the innovator is not sufficient basis of the Indian generic company to go in for a CL route

In effect create a higher barrier to incoming applications & thus walling-out contestable awards that bring no incremental benefit neither to the industry nor to the consumer

Looking ahead

While at the face of it this may look like essentially an opportunity for Indian generic players, I tend to believe that pretty soon the global generic giants will join the game through strategic alliances, acquisitions et al & eventually even innovators would themselves monetize the trend by introducing authorized "cheap" generics - “Cheap” being the keyword, as it is eminently evident from the Nexavar price differential, a mere 20-30% reduction wouldn’t really sway the regulatory sentiment in favour of innovator.

Gearing up for better transparency, eventually

Even as articulation of a position is still a challenge for India in some key policy areas as above, Visibility, mostly aided by cyberization of governance is getting bigger & better in India each day. While digital governance may be an emerging global phenomenon, what makes it unique in the Indian context is that this amounts to a tentative first step towards transparency, a beast that India is struggling to tame for many years now.

Specific to healthcare, within the past four months the Indian patent authority (CGPDTM) has issued draft guidelines for processing patent applications pertaining to Biotechnology; Biological Material & Traditional Knowledge. What makes this interesting is the public review & dialog to aid the process of finalizing the guidelines.

Factors at play

The acknowledgement of a consensus approach to policy making; The concept an of enforcement designed & driven by the stakeholder universe; An attempt to encourage innovation within India by providing clarity on patentability aspects & finally, a rather brave attempt to forestall patent walling-in attempts by companies & to prevent encroachments on traditional knowledge
The pros & cons

ENABLING BUSINESS CLIMATE – As a country that conducts business transactions in English, India already has an inherent advantage with respect to visibility & transparency. The increased digital visibility will go a long way in helping India consolidate this advantage & give a much needed differentiator vis-à-vis the omnipresent Chinese competition

IMPROVED BUSINESS ETHIC – Each step in this direction will help India better its ranking on the transparency international’s corruption index – in part the visibility through digital governance itself is an outcome of higher awareness, wariness of the Indian citizen towards corruption in public & corporate life

DELAYED POLICY MAKING – Though my initial thought was to say nothing negative here, I realize that the Indian problem with ‘clear articulation of a policy’ can be further compounded by the diversity of information received through feedback, debates et al & thus potentially delay the legislation of the guidelines

NET IMPACT ON INDIAN PHARMA – Overall any favourable changes in governance will always translate as a better business/ investor sentiment, eventually

What could Indian Pharmaceutical industry & policy makers do to address the above aspects/ issues?

Indian pharma would do good to dive head-long into this process of deliberation on policies; guidelines etc. and partake in creating an enabling framework. On their part, the policy makers, government should proactively solicit participation of Industry and fine-tune the guidelines in light of practical business considerations.

Looking ahead

As stated earlier, enhanced visibility is the tentative first step towards transparency – it’d be ideal for all stakeholders to do whatever they could to sustain this forward momentum & help India shed the stereotypical image of a difficult third world country.

While I stopped at three, there are some other important factors that can impact the prospects of Indian pharma in some measure - a quick visual representation of these factors is as follows;

One recurring theme in the above discussions is a need for emergence of clearly articulated and transparently evaluated policies which then could be implemented in spirit.

Where no other motivation works the lure of commerce does, well in most cases. While this may sound dogmatic, it is a valid reason for an economy increasingly dependent on globalization & externalization. I wish & hope the Indian Pharmaceutical Industry will play a major role in setting the house in order & thus achieve and sustain their much deserved success world-over.

Sunday, March 17, 2013

IT & ITeS Enterprise in India: an Outsider Perspective based on trends in Investment & Technological Evolution

Why should an outsider perspective matter?
I tend to believe that way too many people have taken Steve Jobs maxim, ‘customers cannot tell you what they need’ at its face-value and in the process probably haven’t realized fully that the very user-experience guidelines Apple Inc., so vigorously pursued, propagated to the developer community made the tech-consumer an integral part of the technological evolution & hence an “insider” for all practical purposes – After all within six months of launching iPhone, Jobs recalled his earlier decree of ‘No third-party apps on iPhone’ :-) - I rest my case here.
Life, tech & the metaphysics of a cyber-quest
The exabytes of sheer information thrown up by an internet-query and the consequent collateral learning at times gives a radically different perspective of the principal quest &/or changes the very course of the search/ research.
That’s precisely what happened when I set-out with an innocuous query ‘Life+Tech’ to check-on how the marriage of life sciences & technology is working out as indicated by the quality of innovation and the investor sentiment towards this emerging IT subset globally and, if India is in-sync with these trends – I strayed off-course quite a bit soaking up some non-serious gyan on gamification, cross-application potential of game mechanics to health & wellness, dallying a while with the first ever ‘drug discovery’ game, Syrum & eventually decided that I’d do good to first understand how the IT & ITeS enterprise is poised in India & then go about speculating on where it could go from here, towards life-tech or some other direction altogether.
The quantitative & the qualitative sojourn

As I looked into the openly available, mostly undifferentiated data** & the trends, I used the following assumptions in order to get as close to reality as possible;
  • Wherever the VC activity has been clubbed under PE, I considered all early-stage & some growth-stage deals as essentially venture deals
  • Where I depended on individual alerts of certain deals, I considered funding up to series-C as venture funding & series-D too if that involved at least one VC 
  • No acquisitions, Mezzanine funding rounds have been considered as Venture capital (which of course wasn’t much)
  • Since I was looking into IT sub-category trends & the only categorization ‘Industry Codes (VEIC)’ by NVCA is surprisingly devoid of some well-understood terms such as “Cloud”, “Apps” etc., I decided to use my own simplistic terminology that’s hopefully self-descriptive
**My primary source for the data was which derives its own info from Venture Intelligence alerts & reports. In addition to this I have also used, primarily for cross-verification of primary category figures, the MoneyTree reports by PWC & NVCA from data provided by Thomson Reuters ……. phew
True to my enlightened detour, the not-so-cursory analysis of the available information on IT & ITeS related investments in India in 2012 drew an interesting picture;

  • Commerce sub-category (B2C e-commerce) hogged the largest share of 45%
  • Services sub-categories (B2B BPO, Cloud, Edutech, IT Services, Telephony) cornered second highest 22%
  • Analytics sub-categories (B2B Internet & Mobile Advertising; web-analytics) that are focused on the increasingly crucial data mining, analysis and consumer demographic profiling gathered 20%
  • Product sub-categories (B2B Mobile apps; PaaS; Software; Health-IT & Gaming) managed only 13% share of investments, helped in a large measure by the Mobile Apps category

From the above observations it can be inferred that the investor sentiment in India is very strong towards Commerce, strong towards Services & Analytics and weak towards Products. This also could mean that the investment in IT & ITeS in India is driven more by the local than the global potential–while this statement may sound altruistic, the statistics seem to support it;
It’s an irony that my initial interest ‘Health-IT’ is very insignificant at 1% of funding – a cursory review of the ‘mobile apps’ companies also doesn't indicate any healthcare component being pursued – so much for my principal quest!
Takeaways for the investing universe, primarily for the VCs
There’s only as much space to jostle around on the e-com super express
  • The e-commerce opportunity while looks tempting is surely reaching the tipping point wherein differentiation & achieving of critical mass is going to be a huge challenge
  • Compounding this is the fact that the global biggies like Amazon, eBay et al that could’ve offered a superior exit option by way of an acquisition have started to get-in on their own (, – banking on the relative ease of establishing a virtual enterprise
  • It’s also apparent that the likes of Amazon are now gearing up to ‘Walmartify’ their online shopping and go physical to enhance user experience! – If not anything, this points out to the cyclical nature of consumer preference of a buying experience & hence the caution one has to execute in putting too many eggs in one basket.

The Quants will rule and later they won’t & then again they would
  • The monetization of analytics opportunity will surely out-pace e-commerce & services given the eventuality of any business is to understand consumer & maximize the consumers buying impulses.
  • Quite interestingly the innovation quality of Indian companies in this domain seems to be pretty high – probably since analytics combines Math & Jugaad, skills Indians inherently seem to possess.
  • I’d also think it makes business sense for the quant in consumer analytics context to be essentially an ‘insider’ &  hence Indian analytics enterprise could always showcase an edge, a value-add
  •  Eventually, while the ‘insider advantage could work in favour of Indian analytics enterprise in the shorter term, the Math + Jugaad + Semantics combination could open the world to India in a big way, touch wood.

Hop onto the Gravy (app) train early on & dish out by the dime
  • Mobile apps development is essentially a platform (OS specific SDKs et al) based innovation that enables small & Individual pools of expertise to emerge quickly & thus very amenable to garage innovation
  • While building of apps is innovation per se’, it is more ‘applied innovation’  (owing to the afore mentioned platform technologies) & hence India won’t necessarily face a quality-of-innovation prejudice
  • Added to this is the global trend of healthcare going mobile progressively, there’s an open opportunity of cellular network providers tying up with local app developers, for the service & transactional ease they’d bring in.
  • Apps are evolutionary products with a limited shelf-life (before being reinvented in a different version) & hence inherently man-power intensive. Given this context & given the explosion of engineering education making available qualified young (& economical) tech work-force that can think in English, India has the potential to become the ‘China’ of mobile apps – if only the rough edges of campus-to-corporate transition can be smoothened out sooner.
  • Using this & some of the 'local' advantages i mentioned under Analytics, I'd think there's no reason why Indian enterprise shouldn't give an India flavor to its Gaming?, after all, all nationalities like to play by their own rules :-) - this would also expose the average indian youngster to the game mechanics that from whatever I read, is poised to dominate every tangible domain in the years to come.
  • And finally, a domain where VCs can play evangelists, stoke the fires of enterprise & seed the self-sustaining revolution of mobile apps – all with minimal risk & funding :-)

And hey, is Mobile Hardware IT too? – thought NVCA said so…
  • Is it me or wasn't there really any investment into the super accelerating mobile handset Indian enterprise in 2012? Unless this is already reaching saturation which I seriously doubt, there’s still a good open investment opportunity. But of course given the capital intensive nature of these start-ups, the scope for venture funding may be low and only at very early stages, but if successful this could turn into a multi-X return by series-B funding itself.

After Thought:

What’s with financial analysts & their compulsive fetish for quarterly reporting? – I’d agree quarterly trends do matter in consumer markets, but I’m utterly confused about their utility in a long-decision-cycle B2B environment like investing – enlighten me folks, I’m all ears!

Wednesday, February 20, 2013

Has the rise of an Indian sun in drug discovery horizon turned out a no-show? OR is it a mere eclipse?

Looking up on google to put together my next post, I typed out the text “Drug discovery prospects India” and the top most hit was that of a 2012 Current Science study that went on to explain how the authors figured that the prospects are poor for original drug discovery in India. Not quite the encouraging start I was hoping for.., I scrolled further down and I find the counter poser, a report by Kauffman, no less, that predicted a bright future for drug discovery in India way back in 2008.

While the 2012 article, incidentally by Indian authors, isn’t necessarily a very brightly designed study and the Kauffman analysis isn’t exactly reeking of academic rigor, together these reports do raise the pertinent question of, if the rise of the Indian sun in drug discovery horizon turned out a no show? or is it a mere eclipse?

To part validate the above hypothesis, I went about tracking the flow of funds into life science enterprises within India in the past four years – some observations;

  • Considering the 2012 article slams the quality of innovation of Indian CROs,  the discovery services companies ironically cornered >40% of all the investment made in past three years
  • The investments into medical devices & diagnostics pretty much followed the global trend which has been incremental over years  
  • Manufacturing organizations, both biotech & small molecule attracted some investment, I’d guess a sentiment again aided by a hope of continued & incremental global outsourcing
  • Drug discovery organizations receiving venture capital rank at the very bottom of the list at 8% (as against 30% globally)

Even a cursory scan of the existing drug discovery strategies within Indian firms throws up the following aspects;
  • A lot of ‘me too’ approaches/ platforms, including choice of target protein that may have already lost out the race to the plethora of US/EU innovator organizations
  • Continuing the above line, a lack of novelty of approach, something that’d make an investor sit-up and take notice
  • Incomplete, inadequate composition of scientific-leadership teams  i.e. key functional leaders & a sound advisory board
  • A surprising lack of in-licensed drug candidates in the portfolios vis-à-vis’ efforts on building novel molecules from scratch
  • A similar lack of high pedigree academic partnerships, Indian as well as overseas
  • Last but not the least, a surprising lack of any focused attempt to use make use of the India-specific advantages like drug discovery based on Traditional & complementary medicine et al

As with most SWOTs, all the above weaknesses can be worked on and converted into opportunities. Looking at the diaspora of top-notch Indian chemists, molecular biologists, bio-physicists, pharmacologists across the globe making highly innovative & astute contributions to the drug discovery, development & clinical evaluation, I’d readily dismiss any talk of Indians not being up to it when it comes to path breaking innovation – only there is a definite need to re-purpose Indian drug discovery enterprise model, if I may say so & probably this is true for most other domains even.
Now, who’ll bell the cat? I say why not the investing universe?  of all geographies and domains out there, Indian drug discovery enterprise is where there's a crying, albeit unacknowledged, need for some astute thought leadership and strategic oversight so as to build, nurture & steer the foggy but promising entrepreneur pool - and who better than the venture capitalist to assume this constructive role, shift the paradigm & eventually partake the fruit of success?

Food for thought.


It’s about time the IRR of an Indian discovery organization is determined by the sheer value of the IP & portfolio it generates and NOT on whether the company is incorporated in Boston, Basel or Singapore.