VC investment will slow down

Mohanjit Jolly, executive director of Draper Fisher Jurvetson (DFJ) India, a venture capital firm, stunned the audience at a conference on venture capital at IIM-A by terming venture capital as the most expensive, and saying that it should be the last option to seek capital.

He relocated to India in September, 2007 to establish the DFJ India office and help manage DFJ’s India portfolio. Mohanjit currently serves on the boards of Reva, Mchek, Canvera, Cleartrip, Attero, Seventymm, and Naseeb Networks. He shares his views with DNA on his India operation, recession and more.

How has been the journey of DFJ in India so far?
DFJ India has been investing aggressively. Out of a global $650 million fund that it intended to invest over three years, $100 million is the allocation for India. So far, we have invested or reserved $65 million and talks are on to invest the remaining amount.

Have you identified any cos in Gujarat?
Talks are on with many companies, of which a few are from Gujarat also. But the talks are at the initial level. There are some very good proposals from people who are passouts of IIM-Ahmedabad.

What will be the trend of venture capital (VC) investment in 2009?
Even though new funds have been raised and new VC firms entered India in 2008, the pace of investment will slow down for two reasons. First, VCs who have an established portfolio will tend to spend more time making sure that existing companies survive 2009, be soldmerged or wound down if necessary. Second, the timeline and depth of diligence for investment will increase with greater scrutiny on team, financial business model, customer traction etc. The timeline for a typical VC investment may increase from 3-4 months to 5-6 months, or longer.

How should companies tackle current slowdown?
We should not worry about things which are out of our control and should worry about what we can control. Many companies, especially start-ups will have to take a fresh look at their business plans, and many will have to retool or completely rewrite them because the fundamental assumptions made during the original plan may no longer hold true in 2009.