CHENNAI: In the world of venture capital and private equity, the future holds the key. Everything hinges on knowing which area will make it big, whether or not it is affected by the slowdown.
Arun Natarajan, CEO, Venture Intelligence, provider of information and networking services to the private equity and venture capital ecosystem in India, spoke about such areas of promise.
“One thing the venture capitalists (VCs) look for from an investing standpoint is which areas would do well five years down the line,” says Mr. Natarajan. Considering this, there is a lot of interest and investment into education. “From pre-school to JEE or GRE test preparation, VCs are keen to invest in education,” he says.
The other area is what is broadly termed as ‘clean technology’. It covers anything from solar lanterns to bio-diesel, and projects in alternative energy. “This includes solutions for rural areas,” he says.
Companies which focus on domestic consumption are hot property. “There is no reason why a coffee shop here should shut down because of the U.S. recession,” he says. Food and beverage, packaged food, restaurants and cafes continue to attract investments. “There is money, but the flow has switched from export-oriented companies to such firms,” he says.
In the IT industry, not too many start-ups are able to generate interest; those which have been around for some time, seem to be the place for investors, he says.
With captive centres being sold off, third party outsourcing will benefit, says Mr. Natarajan. Captive centres are those which are established directly by foreign companies to do their outsourced work. If the parent company is affected, then the captive centre becomes a target for acquisition. “VCs are happy to finance takeovers of captive centres,” he says.
Power is another area which is sparking interest in private equity (PE) firms.