Laure Wang (L) and Yoram Oron

India has received its fair share of attention from the venture capitalists (VCs) in the US, but has till now remained off the radar for VCs in Israel, Taiwan and Shanghai, which are world's leading centres of technology entrepreneurship. This may be about to change. VCs in Israel, especially, are looking at India with a new interest to reduce the cost of product development and also to tap into Indian marketing and sales skills. A delegation from India is visiting Israel this month to explore possibilities of cooperation. "The possibility exists. There is the case of Ness Technologies, which has a development operation in India. The crucial thing is that Israeli firms usually deal with cutting-edge technology, while India is more focused on services," says Yoram Oron, managing partner, Vertex Venture Capital, a $300-million fund based in Tel Aviv.

Israel's venture market is estimated at $2 billion, and the dominance of Israeli companies is significant in the communications sector. Almost 50 per cent of world's codecs - algorithms that convert sound and images into digital form - are developed in Israel. Right now more than half of the companies are into telecom-related development, mostly subsystems for telecom equipment in wireless and fixed-line segments. Indian companies, especially Wipro, Sasken and Hughes Software, are pretty strong in telecom software. "... As R&D activity globalises, and [spreads] in India also, we as VCs will have to follow that pattern in terms of investments; if not directly then through our portfolio companies," says Zeev Holtzman, chairman and CEO, Giza Venture Capital, a $316-million fund based in Tel Aviv. A key issue before Israeli firms is that many of them tend to sell to original equipment manufacturers, and that means that their sales skills are more attuned to wholesale rather than retail. "Indian companies sell to many end users. It is an area where India could be useful from an Israeli perspective," says Oron.

For the Chinese and Taiwanese VCs, India is 'interesting', but little beyond that at the moment. Taiwan wants to become the chip design hub now that semiconductor manufacturing has started shifting to China. With foundries like SMIC and CSMC in China, there will soon develop an ecosystem there, and Taiwan would have to increase its expertise in design. "Like most US VCs, we don't do a deal unless it leverages Asia. But we haven't come across opportunities that can leverage Taiwan, China and India. Perhaps in developing algorithms India can be an interesting place to look at," says Laure L. Wang, general partner, Pacific Venture Partners, a $800-million US fund that invested in world-class Taiwanese companies like TSMC and UMC. A key reason is that companies from both economies are too busy looking at each other through a competitive lens to explore opportunities. "Many of my friends were Indians while I was studying in Canada and I have spoken to them about making our portfolio companies in China work with Indian companies. But it never seems to work out," says Feng Tao, managing partner, New Margin Ventures, a $100-million VC fund based in Shanghai.