Before the alarm bells start ringing and you start imagining a build-up of another boom and bust cycle a la 2000, rest assured that it's a very different game this time with a different set of participants and a very different environment. It's no longer the rookies and greenhorns chasing big money with their post-exit plans ("I want to retire in the next four years") in place even before the first employee is on board. No longer is it the VCs who want the valuations, valuations and valuations, and worked on a model where eyeballs equalled revenue and the investment philisophy was largely assumption led. And no longer is it an environment where every deliverable is linked to future growth, and the Indian market still a promise.
The entrepreneur this time is a different animal. Most of the new breed fall in 30-50 age group, are highly educated, have solid industry experience, are much more realistic and have a long term view for their ventures. "The quality of entrepreneurs is much much better this time and they are not opportunistic like the last time around," says (Avish Bajaj of Matrix Partners), who successfully co-founded baazee.com during the last wave.
.."It is a different mindset, even if the profile is the same. Now people are prepared for the long haul," says Alok Mittal (of Canaan Partners), who co-founded Jobsahead.com in 2000.
One factor that has spurred many entrepreurial apirants to take that leap of faith has been the general business environment, which has turned decidedly conducive over the last 24 months. Be it a strong domestic market, or newer avenues to access capital, or the regulatory environment, or development of hubs like Gurgaon or Bangalore, all aspects that are required to build a robust entrepreneurial ecosystem are falling in place.
With the middle class fuelling a consumption boom, the domestic market has become attractive. So consumer and related businesses are good bets with fair chances of surviving and thriving. Even the tech space is witnessing a pick-up in start-up activity with centres like Bangalore feeling the buzz again.
Arun Natarajan is the Founder of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.