VCs click on Indian dotcoms

Nifty BSE | NSE 25/05/12 Are Mutual Funds betting on Nifty?

The Indian dotcom scene is hotting up with venture capitalists promising USD 4 billion in investments in the next three years reports CNBC-TV18.

 

 

The Indian boom is benefiting online entrepreneurs too. That's because venture capitalists are back again - pouring money into dotcom like Bharatmatrimony, Shaadi and Sulekha. VCs are being attracted by the potential of e-commerce in India.

 

By 2007, online commerce is expected to be Rs 2,300 crore market. That's roughly 10 % of India's organised retail market by 2007.  India's online population is predicted to grow four fold to a 100 million by 2007, from 25 million now. As investments increase, so do valuations. But are valuations getting stretched? 

  

"My opinion is that valuations are certainly on the higher side. We have been investing in India since 2003 and we've seen momentum building similar to what happened in the dotcom days and its kind of a cyclical pattern and I think the best thing to do is stay rational" says Sujit Banerjee, Partner, Blue River Ventures

  

But VCs unanimously agree that this time around the dotcom boom is for real. Dotcoms now are coming up with real-world cash flow and revenue models. A far cry from quoting eyeball figures in the '90s.

 

Online advertising too is now primarily based on realistic pay per click models. A PriceWaterhouse Cooper's report expects online advertising in India to touch Rs 750 crores by 2010. What does this mean? That the promise is there, but expectations could do with a little moderation.