A Look at Modern India

12/16/11

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acquiring the dominant fountain soda at the time, Thums Up, and slowly phasing it out in favor of its iconic beverage. Unfortunately, as tourists in India quickly discover, Indians prefer their soft drinks to be a lot fizzier and sweeter than westerners. Despite its efforts, The Coca Cola Company was unable to dislodge the Thums Up brand as India’s favorite soft drink.

Coke’s inability to replicate the success it experienced elsewhere did not deter multinational corporations, of which there were hundreds, from investing billions in India. James Winterbotham, an investment consultant at India Advisory Partners Limited, argues that for multimillion-dollar development projects there is no shortage of funds and that “raising large amounts of money can be easier than small amounts”. Indeed, building a multimillion-dollar grain elevator and silo appears to be more lucrative than putting a few hundred thousand dollars in a Web startup. The concept of venture capital is still very novel, with India boasting just a few VC and angel firms such as Indian Angel Network and Seedfund; and unlike U.S. syndicates, many of these have not yet taken on a specific field of interest, making investing firms more receptive, especially to products specifically designed around the needs of Indian consumers.

Business plan competitions and incubator programs are also making their debut in India. However, they do not offer sums of money or services even close to rivaling those offered at U.S. universities or competitions, and yet some of these, such as the Indian Angel Network Incubator Program (IANIP), demand equity in exchange for being incubated. Previous participants of various Indian incubator programs expressed their disappointment at the ability of these programs to provide them with effective and pertinent mentorship. However, in a country where badges and certificates are highly regarded, they explained that simply being associated with such programs was a major door opener to investors that would not have taken a second look at them. Due to the shortage of avenues available to reach prospective investors, it is sometimes worthwhile to give up equity in order to increase the chances of securing institutional funds.

India is a land of paradox that is constantly changing and redefining itself, with new opportunities emerging for foreign investors and young entrepreneurs. It is a market that requires a carefully crafted strategy in order to navigate through the multitude of challenges inherent to the region.

Maxime Pinto is co-founder and chief marketing officer at Roof For Two, a Boston-based startup focused on the Indian market. Follow @

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