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Why VCs are more bullish on product cos. now

As part of its cover story on software products, Businessworld had organized a roundtable discussion featuring, among others, Subash Menon, CEO of Subex Systems and Sudhir Sethi, chairman and managing director of IDG Ventures India. Excerpts:
Subash Menon: Products have a life of their own. Services go around the products. One cannot stand in for the other. You have a delivery model that is SaaS (software as a service). That is what is prompting this question to some extent. But then SaaS is just that, a delivery model. You still need a product to deliver SaaS. You cannot have a service being delivered as SaaS. India as a country has to get going on the so-called software space, as is understood globally, then you have to have your own products that are expected by the customer.

Sudhir Sethi: I call it the Brownie movement, which has been seen in the past two years in terms of what is happening on the entrepreneurial side as far as product is concerned. Two to three years ago, the number of venture investors used to be from a financial engineering background. Whereas, in the past three to four years, a lot of industry people have come into the venture world. Many product companies have been funded by people with very deep operating backgrounds who have entered the venture industry. That was a very big thing per se.

Secondly, as a fund, out of our $50 million, we have committed $40 million to products. Interestingly, two of them are serial entrepreneurs. We are finding more incidence of serial entrepreneurs doing the second or third attempt at the company, and it really does not matter whether the first or the second has been a success or not. The experience itself is worth its weight in gold.

Arun Natarajan is the Founder & CEO 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. Email the author at arun@ventureintelligence.in

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