Few days back there was a post on my blog which had raised some questions on the Web 2.0 phenomenon.May be post the dotcom-bust,Web 2.0 has been a savior for many of the companies.Was reading this week’s Business Today and found an interesting article titled “VC’s still love Dotcoms”(Page-72) , which gives an insight into dotcoms from the VC’s point of view.It has interviews by Ashish Gupta of Helion Ventures,Promod Haque of Norwest Ventures and Alok Mittal of Canaan Partners.Let me try to list down some of the important points mentioned in the article:

Last year, VCs invested $166 million in 27 internet companies,compared to $17 million and 2 dotcoms,the year before.So,VCs are quite optimistic about dotcoms

What sort of dotcoms are VCs interested in(by Ashish Gupta):

1. It must be one that addresses a customer pain point or fills a market gap
2. It must be differentiated and unique , and most importantly scalable
3. As per VCs , startups in education,financial services and healthcare are some of the most attractive areas
4. You’d better have a top-notch team that has worked together for some years,if you want to make raising money a cinch.
5. There’s so much more to do with the internet , since the old backbone that most companies relied on will soon be redundant

Other emerging areas around internet?
Ashish Gupta says “There are lots of interesting opportunities in the hybrid areas that combine the internet with BPO or the mobile phone”.Helion Venture’s investment in JiGrahak,a Bangalore based mobile startup is an example of this trend.

As per Rajesh Jain,Managing director of Netcore solutions, there are two obvious problems:

1. Indian entrepreneurs want to imitate the success stories in the west and VCs also feel most comfortable investing in them.
2. However,there are not many success stories in a given vertical.There is only one YouTube,MySpace or Orkut.

Below is the statistics of the VC investments in dotcoms(from January,2005 till date):

But there are other areas like Embedded market, Organized retail(though there are VCs already investing in this one), where we have lot of startups waiting for funding.It is obvious that the risk in such companies would be much higher , than in a dotcom This post on my blog focussed on two such startups in that field.May be,it is time when VCs should look beyond dotcoms since, the real innovation comes from such companies !!!