Entrepreneurship emerges as the new song of India

In early October, two dozen Boston-area venture capitalists paid $3,500 each to take a weeklong excursion to India. They saw three cities in seven days, met with entrepreneurs and chief executives, and had a private sitting with the president of India.

This wasn't a mere offshoring junket, a hunt for software designers who can offload work from US portfolio companies. The VCs were investigating -- in many cases for the first time -- how to put money to work in that booming Asian economy.

''What was surprising was the entrepreneurial energy," said Axel Bichara, a senior partner at Atlas Venture in Waltham. ''There are people with business plans trying to raise money. Most of these companies do not fit the US entrepreneurial model. But seeing the energy and drive was refreshing."

Think Boston and Silicon Valley in the early 1990s, when the Internet was still new and fresh fortunes were beginning to be made, when it grew fashionable to be a techie, and a new generation of workers was feeling the ka-ching of money in their pockets. This burgeoning Indian middle class, with its contagious optimism, is starting to lure American investors who are hungry for a new hot spot.

Last month's trip to Mumbai, Bangalore, and Delhi was invitation-only, led by The Indus Entrepreneurs, a Boston association of Indian business leaders. The group approached VCs from such firms as Atlas, Kodiak Venture Partners, and Bessemer Venture Partners ''to provide them with a basis for conducting business with India." Earlier in the year, the group's sister organization in Silicon Valley led a similar sojourn.

Subhash Roy, a principal at Kodiak in Waltham, has been to India many times. But his firm sent him on the Indus trip, he said, in part for the access the group was able to provide. The itinerary was intense, he said, with meetings and events every day from 8 a.m. to 10 p.m. The group was introduced to nearly 30 start-up companies looking for funding. They met the chiefs of major wireless companies that would like to work with American start-ups.

Kodiak hasn't made any direct investments in India yet, Roy said. But the firm has made numerous investments in Canada and is mindful of the buzz of activity in Asia. Nokia Venture Partners opened a New Delhi office in July. ChrysCapital Investment Advisors, with offices in New Delhi and in Palo Alto, Calif., has raised $250 million to invest in India. The Carlyle Group of Washington, D.C., has a Bangalore office to help invest its Asia Venture Fund. Battery Ventures in Wellesley is about to close a deal in India in the next few weeks.

''India and China have become really important markets and marketplaces. It's gotten to the point where they just can't be ignored," Roy said. The trip, he said, ''was really to start our overall understanding of what the possibilities can be."

Understanding India is no small task. It is a nation of 1.1 billion people who speak 14 languages. It is a place of growing prosperity but also entrenched poverty. It is a culture that values education, has an enormous English-speaking population, and, according to one native venture capitalist, is ''severely underinvested."

Rahul Bhasin, managing partner at Baring Private Equity Partners Ltd. in New Delhi, on a recent visit to Boston, said there is little current danger of having too much venture capital in India. The entrepreneurial economy is nascent and hungry for cash. But he is chuckling a bit over Americans parachuting in to look at deals.

''What would you say if I brought a bunch of guys from India over here and said, 'We're going to do deals here'?" Bhasin said. ''Indian companies need a lot of work. You need to be hands-on and very involved."

The kinds of companies that are thriving in India don't often fit the classic US venture capital model. For one thing, it's the service sector that's booming: call centers, data processing, and software testing. American VCs are most often looking to invest in product companies. And while India badly needs to improve its infrastructure, from electricity to telecom, such investments can be costly and risky. Bhasin, for instance, said he doesn't want to invest in technology companies in India, but rather the companies that are benefiting from the boom. Motorcycle sales are huge, for example, because thousands of Indian workers are buying them, he said.

Atlas's Bichara said service companies often can't grow at the rates venture capitalists are looking for. His firm is interested in Indian technology start-ups that might want to build their management team in the United States.

''The best entrepreneurs understand that they need to look to the US from early on," Bichara said, for strategic partners and customers. ''We're really only interested in companies that can be worldwide leaders within a few years."

Beth Healy can be reached at bhealy@globe.com.