I was in Bangalore last week on business and I happened to have dinner with an Indian venture capitalist. He told me that VC interest in investing in India (note that the last four words started with ïn“, pretty cool!) has really exploded over the last few years.
That in itself is not exciting news. After all, we’ve been reading about Indian outsourcing for some time and I suspect that even the non-techy ‘man on the street’ associates Bangalore with offshore development. So investing in outsourcing wouldn’t really cause me to raise an eyebrow.
But it turns out that a lot of the VC investment isn’t around outsourcing but rather around Internet companies for the Indian market. And here’s why this is such an amazing opportunity. Currently, there are only 40 million Indian Internet users – that’s out of a population of over one billion. Compare that to the US where the number is something like 250 million – basically everyone but toddlers – out of a total population of 300 million.
Now granted, India is not going to reach that level of saturation anytime soon (the VC also told me that TV penetration in India is only about 30%). But let’s assume that within a few years 10% of Indians will have Internet access. That’s about 100 million users. And these users are fundamentally different than the US usage base simply because they are exclusively upper middle-class or upper-class users. Translation: 100 million users with a lot of disposable income.
The bottom line is that the Indian Internet opportunity is probably as big or bigger than the US market and it’s in it’s infancy (four words starting with “i.”) It’s like the US Internet market in 1995. This is a goldmine we’re going to be hearing a lot about in the next few years.