Edited by Anthony Bartzokas and Sunil Mani
8. Venture capital and innovation: the Indian experience B. Bowonder and Sunil Mani INTRODUCTION The purpose of the chapter is to understand the value-adding support functions which venture capital companies, render to their investee companies, especially in the Indian context. As seen in the earlier chapter by Mani and Bartzokas, the VC industry in India has exhibited signiﬁcant growth during the 1990s. In fact one sees a coevolution between the growth of VC and the growth of the IT industry in the country. This chapter is structured into three broad sections. The ﬁrst section traces the growth of the VC industry in the country, while in the second section we discuss detailed cases of 11 investee ﬁrms. Finally in the last section, we summarize the main insights obtained from these case studies. THE INDIAN VC INDUSTRY The government took a major initiative in establishing a VC industry in India towards the latter half of the 1980s. Its genesis and subsequent growth up to the mid-1990s are discussed in Mani (1997). The initial growth of the industry was regulated by the VC guidelines of 1988 which, as noted in Mani (1994), were an important document in the sense that it clearly laid out the scope of venture ﬁnancing in the country in terms of specifying (a) stage of ﬁnancing, (b) instrument of ﬁnancing, and (c) industry of ﬁnancing. The ideal type of venture ﬁnancing envisaged was equity ﬁnancing at the early stage of technology-based enterprises. There are currently three1 separate...
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