March 3, 2007

Why are'nt there more semiconductor startups in India ?

We have been coming across so many new companies getting funded by VCs and thats make us feel that "Entrepreneurship is on a rise in India" and VC's are more confident on investing in upcoming startups in India.

But,if you see the trend , most of the companies operate in the Web 2.0 space and there is a lot of confidence shown in this market.There was a news about RouteGuru(which lies in the Telecom space) getting Rs 10 Lakh funding through TechTribe but where exactly is Semiconductors in this entrepreneurial field question

From the new Semiconductor Policy which was announced recently , there were lot of positive points coming out for the Indian semiconductors industry.Below is a small snapshot of the policy

Positive side of Indian SemiconductorsNow after good news, some bad news has to follow.Just came across this article , which mentions about the Semiconductor entrepreneurs Vivek Pawar of Sankalp Semiconductor,Uma Mahesh of Indrion,PVG Menon who is working on his own venture and many more in the list.

Leaving the managerial side(which does not have much problems),the article reveals the problems in the funding of semiconductor startups in India.A small excerpt from the article:
Though there is a lot of VC money floating in the market, and U.S. VCs being increasingly India bound, there is not much enthusiasm among the community for funding semiconductor product start-ups. Says Mahesh, who has been negotiating actively with many VCs for the past five months without having been able to close the deal, “The VCs here still have a software services mindset, and are unwilling to bet in the chip product field.”
Gani has a different viewpoint, “There is no dearth of money, what is lacking is a sound business plan.” In accordance, the skepticism on part of the VCs is understandable, also given the fact that this space involves more risk, and a higher capital. As opposed to a typical software services firm, where money is required for paying salaries, in the silicon space, technology development takes up a big chunk.
Many other interesting facts about management,funding and recruitment in semiconductor startups can be found here

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