VCs in India
By Sarah Lai Stirland


Part I: The entrepreneur who stayed at home
BOMBAY, INDIA -- In the world of technology startups, the trajectory of Ravi Kailas’s career was not unusual. After finishing his degree in communications engineering followed by his MBA in 1988, the young Mr. Kailas started out by working for his family’s manufacturing business. Eventually, like the majority of other highly educated Indians, Mr. Kailas emigrated to the United States for a couple of years, where he worked with his millionaire uncle Dr. Kailas Rao, an entrepreneur who heads up Industar Digital PCS, a small wireless communications provider based in Milwaukee, Wisconsin.

Before long, Mr. Kailas decided to start his own company. What was unusual about Mr. Kailas’s decision was that he decided to return to India to begin his career as a telecommunications entrepreneur, instead of settling in Silicon Valley. In Bombay, Mr. Kailas in 1994 founded Zip Telecom, the first local subsidiary of what he envisions as the Zip Global Network, a global consumer telecommunications marketing and retailing company.

Mr. Kailas says that up until a year and a half ago, he financed himself through savings and with a loan from his father. Then he received $1.5 million from a newly formed local venture capital fund called IndAsia Fund Advisors. The fund’s partners subsequently helped Mr. Kailas secure $10 million from the closely held New York investment bank Andersen, Weinroth which last July valued Zip at around $30 million.

Though the numbers sound small by U.S. standards, Mr. Kailas’s success thus far is somewhat of a breakthrough for young entrepreneurs in India. Until about a year ago, venture capital financing for these types of innovative and ambitious new technology business ideas just wasn’t available in India. But over the past year -- and in the past few months especially -- venture capital funds established by both foreign companies and local businesspeople have sprouted up like mushrooms. And 33-year-old Mr. Kailas is a pioneer who embodies a way of thinking and doing business that both the Indian government and the local business community fervently hope will become the norm. Business leaders are banking on the new class of entrepreneurs to become a major driver of the country’s economic growth.

Next Page: Creating "Ind Valley" >>>