Company Name : national institute of technology Surat(SVNIT) Source : http://www.financialexpress.com/news/clean-technology-will-be-one-of-the-more-heavily-invested-segments-in-india-this-year/429559/0

 Mohanjit Jolly is the face of Draper Fisher Jurvetson (DFJ) in India. With over $4.5 billion in capital commitments, DFJ has funded global technology companies like Hotmail (acquired by Microsoft) and Overture (acquired by Yahoo), Skype (acquired by eBay). Jolly set up DFJ office in India in September, 2007. He sits on the boards of Reva, Mchek, Canvera, Cleartrip, Attero, Seventymm, and Naseeb Networks. In an interview with The Financial Express, he talks about the potential of venture capital investment in clean technology in India. Excerpts:

While the venture investment in clean technology went up globally in 2008, it fell in India. What could be the reasons for it?

The drop in clean technology venture investment in India is not surprising. Most venture investors in India started out as early stage technology investors. Now many have moved to a stage and sector agnostic approach to venture investing. Although there is a lot of interest in, and some might argue, hype around clean technology, it requires a certain level of sophistication and expertise—whether directly within a firm or outside of it through advisers. There is often a need for deeper pockets, as many of the cleantech initiatives are capital intensive. It’s a phased approach within India where 2008 was perhaps more a period when VCs were trying to figure out the areas that they need to focus on and educate themselves about. I think this year you will actually start to see the results of that education phase.

How will global slowdown affect venture investment in clean technology in India?

Loosely speaking, venture investments tend to fall in two categories. The first category is ‘vitamins’. The second category is a ‘cancer drug’. During good times, even vitamins sell. There is a disposable income base and people experiment with buying products or services they can afford to. It’s not necessarily because they need to. The cancer drug category is where price insensitivity comes in. It’s a pain point that needs to be addressed or it’s a case of not a ‘nice to have’, but a ‘must have’. I would put clean technology space into must-have rather than nice-to-have category from an investment standpoint. The overall venture investment pace will slow this year, and it will have an impact on clean technology investment as well. Having said that, I still predict cleantech investments as being one of the more heavily invested segments in India in 2009.

Why do you think that clean technology falls in a ‘must have’ rather than ‘nice to have’ category?

The supply-demand gap is going to continue to exist in India for a long time to come. For the country to make progress across all categories, basic infrastructure needs including energy need to be addressed. When the government says we must grow at n% over the next so many years to eradicate poverty, it means our energy requirement is going to only go up. One key point that I would like to make is that one has to think of cleantech not only in terms of alternative energy sources like solar, wind, and bio which I call the new cleantech, but also in terms of making the traditional sources of energy (such as coal, which accounts for over 60% of the energy production in India) more efficient. I call this the old cleantech. Both are equally important for India to bridge the gap between ever growing demand and supply.

How will venture capital investment in clean technology compare with overall venture capital investment during these tough times?

My guess is that the pace of venture investment in clean technology will definitely slow down this year and potentially next year, given that the overall VC investment will slow down. My prediction is that out of the total VC deals this year, the percentage of clean technology deals will be higher than it was last year. The overall number of deals may be lower, but clean technology will take a bigger percentage from a percentage of the pie than it did during last year.

What are the factors that are in favour of clean technology?

There are three key factors in favour of clean technology. Firstly, the overall level of awareness for doing more with resources that we have as well as creating alternative sources of energy is high. Secondly, there is a fairly significant push from the government in terms of incentives, resources, subsidies etc, which makes the sector more capital efficient than it otherwise might be. Thirdly, we have a very large and growing market. An aside is that many seasoned executives who are returning from the US, for example, to India for personal or professional reasons, are now either joining or starting cleantech companies. As a result, the calibre of teams that are starting and operating these ventures also makes it more interesting from a venture standpoint.

What are the promising clean technology segments according to you?

I would say clean water, off-grid energy generation projects, and waste to energy (whether it’s municipal, electronic, flu gas/heat etc) would be very interesting this year. The grid is fairly ineffective and much of the country’s rural population simply doesn’t have access to any electricity.

Let me give a specific example. India now has over 350M mobile subscribers and is still adding 8-9 million per month. Some have suggested that the mobile phone is the future communication, computing and commerce platform for the country’s rural population. Yet, telcos are having a hard time installing and maintaining towers to keep pace with growth. Often these towers are in remote locations, with no access to power, and running 24 hours on diesel gensets. They are aching for an off-grid captive power plant for these towers. These same captive power plants could be applicable either at the factory, village, community or township level because the grid itself is flawed and the transmission losses are significant.

The other segment that is likely to get attention is waste water treatment and reuse and recycling of what is usually called grey water. Water is a resource that may become a global problem even before we face fuel depletion. Many of the above areas may not necessarily be addressed by companies inventing new technologies or products in India. Rather, they will more likely be stellar teams that will license technology developed elsewhere but Indianise it and execute the deployment and proliferation of that technology immaculately.