Vinit Bhansali wrote: [ on 06:15 AM 5/16/2007 ]
Well, this has been a very common issue amongst VC's (atleast what I get from their blogs) about how the barrier to entry is so low that very few companies require multi-million dollar investment early on.
To my way of thinking, "low entry barrier" *necessarily* implies greater marketing costs. If you're very smart or very lucky, these costs may not involve too much cash (cost is not measured only in dollars), but don't bet on it.
So the startups that "can" use the $5-10 million in a first round still exist but the ones that need only $100-500k are showing up in greater numbers.
Since marketing costs in the US are an order of magnitude higher than in India, voilà. So, even for those US companies which take $100k as a seed round, they'll need further cash infusions earlier than an equivalent US company - either from internal accruals, or by some other method.
Udhay -- ((Udhay Shankar N)) ((udhay @ pobox.com)) ((www.digeratus.com))
