100 mks project (venture capital)

shweta_86

My 100 mks project topic is venture capital...Need some info on the current scenario of venture capital in India

***vengabeats***

Here is a very good interview on Venture Capital in Biotech Firms

There's a Need for Incubation Funds for Biotech Firms with Novel Ideas

Vishnu Varshney, managing director & CEO of Gujarat Venture Finance Ltd. regarded as a pioneer of Venture Capital funding in India, has about 30 years of experience in Equity Investments, Project Planning, Implementation and Turnarounds. He was selected by the World Bank and Gujarat Industrial Investment Corporation (GIIC) to start Gujarat Venture Finance Ltd. (now known as GVFL) as an independent, autonomous organization at Ahmedabad, during July 1990.
He serves on the screening committee for Venture Capital Funds of Small Industries Development Bank of India (SIDBI), the Board of Rajasthan Venture Capital Management Company.
Varshney shared has views on the current state of venture funding, growth and future of biotechnology industry in Gujarat and the implementation of Gujarat Biotech Venture Fund, in an exclusive interview with YV Phani Raj of Pharmabiz. Excerpts:
What is the scenario of venture capital funding world-wide to biotech companies? How is the scenario different in India?
Worldwide, the venture capitalists' (VC) investments in the life sciences sector returned to prominence in the second quarter of 2005. The life sciences sector - biotechnology and medical devices industries together-bounced back to $ 1.5 billion invested in 154 companies compared to $1.0 billion invested in 135 companies in Q12005. For the first half of 2005, life sciences accounted for 25 percent of all venture investing, in line with its dominant position over the past two years.
The Indian biotech industry touched the $1 billion mark in 2004 and is expected to touch $5 billion by 2010. As a signatory to the TRIPS agreement, India's entry into the Product Patent regime has given a boost to the R&D field. As far as Indian VCs are concerned, biotech is still a relatively new and unchartered area, though there is an increasing interest.
What roles do venture capital companies play in a country like India where Central Government funding is limited?
It would not be entirely correct to say that central government funding does not meet the needs of the industry. The government is still the single-largest investor with budgetary allocation touching $500 million in 2002-03. However, this funding is, generally, in form of soft loans and grants. And this is where VCs have a role to play.
As in the USA, VCs can play a major role in the growth of the biotech sector in India. VCs have more risk appetite than conventional forms of funding. They are ready to invest in an idea that has the potential to grow big. And, what actually differentiates VC funding from other type of funding is the hands-on approach of management of the company. Value-addition in strategic issues as well as day-to-day operations is an important criterion to decide the form of funding you are seeking.
Many new biotech companies are emerging in India what commercially viable novel ideas. I strongly feel there is a need for an incubation fund for such companies, which will help them to become 'VC-able'. Once they art here, VC firms like GVFL can take them to the next level.
GVFL has come out with a biotech venture fund, what is the current status? When is the current status? When do you expect early stage entrepreneurs actually start receiving funds from GVFL?
The fund is currently at the fund raising stage. GVFL Ltd will mobilize the balance fund from institutional investors like SIDBI, UTI, banks, corporate entities and high net worth individuals as prospective investors.
We expect to make our first investment by this year-end. The plan is to invest in 6 to 8 companies across diverse sectors and stages of growth.
How do you see the future of biotechnology in India and what initiatives would be required to achieve success in this area? What are the major challenges before the biotech industry and venture capital companies funding biotechnology, particularly start up, companies?
Given the growth potential biotechnology is an ideal area for venture capital investment. However, the risks associated with such companies are also high. A definite regulatory framework with well-defined responsibilities of each body is yet to arrive.
Another major challenge is the exit route or the VCs, especially from the small and medium companies.
However, there are some positive developments recently, which will certainly help the biotech industry, in general, and potential entrepreneurs, in particular. The Product Patent regime and proposed single window clearance are some of good news for the industry. Biotech firms should now concentrate more in developing patents, professional management and innovative ideas. The quality and outcome of research need to align themselves towards application of this technology in industrial sector to show more RoI to investors. Compliance with internationally applicable laws and GMP should be a major area of focus for all the companies.
How do you see Gujarat in the Biotechnology map, both within the country and globally, by 2010?
The Gujarat Government has identified few areas to strengthen its biotechnology credentials like establishing a biotech venture capital fund, setting up a Biotech Park, setting up a new R&D institutions and promoting establishment of a bioinformatics institute in Gujarat.
Presently there are over 35 biotech companies in the state and the number is likely to go up in near future. Looking at the overall scenario, I am positive about the industry in Gujarat, and feel that it has the potential to grab a major chunk of the total biotech market in India.

Source: Chronicle Pharmabiz
Date: September 29, 2005