VC investment in India fell sharply in the first quarter from a year ago as the country saw fewer and smaller deals that were targeted mostly at later stage companies in business and consumer services
India saw $99 million in 16 deals, down more than 80% from last year, when VCs plowed in $513 million in 37 deals.
The average deal size was cut in half to $4.1 million, according to Dow Jones Venture Source.
As with China investment, most of the money is going to consumer- or business-facing startups, rather than traditional IT companies developing software or hardware.
The big M&A news out of India is the Government of India’s (GOI’s) upcoming liberalization of reserve capital requirements for Indian companies to make international acquisitions. The GOI is encouraging the acquisition of Western companies that have not gained cost-effective access to global talent pools.
The acquisition plus globalization (G+A) business model will allow Indian companies to profit directly from the efficiencies of globalization, rather than simply serving as contractors for Western multinationals.
U.S. investment banks and private equity funds could adopt a similar strategy, scouting for U.S. companies that have globalized only under high-priced arrangements or have not globalized so at all. There are plenty of opportunities for taking marginally profitable companies and flipping them under a G+A business model.