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The dream is over for derailed Indian dotcoms
All across India, dotcom dreams are suddenly going bust.
For those looking for a taste of the high-tech fast lane, India's commercial capital, Mumbai, and high tech cities such as Bangalore and Hyderabad used to be the places to start.
Over the past decade, India has been a haven for venture capitalists (VCs) looking for massive profits. Attracted by the nation's highly skilled software engineers, VCs have invested millions in emerging Internet businesses. Until now.
Dotcom entrepreneurs now acknowledge too many players crowded too quickly into a comparatively small market.
The result is that suddenly the brakes have been slammed on India's dotcom sectorsays Internet entrepreneur Manish Sharma..
"Dotcom is a four letter word today,"
Sharma speaks from experience. A year ago, he was among a slew of entrepreneurs setting up almost 300 dotcom companies a month in India. Now that number has declined to 60 and Sharma is laying off staff.
One of the ventures in which he was a partner -- an Internet greeting card company -- is shutting down.
"Most of us are 28 or 29 (years old) and we have come out of a very expensive MBA school. It has not given us the credibility of Stanford or Harvard, it has given us a lot of learning," says Sharma.
One of the lesson's Sharma says he's learned is that it takes more than just a hot idea to strike gold in the Internet world... it takes a well thought out business plan.
Sharma says he and other entrepreneurs overestimated the size of the Indian market. India has just two million net connections. By comparison, the United States has eighty million net users.
Given low credit card penetration, studies estimate India's e commerce revenues at only $75 million a year.
For instance, India once boasted thirty sites on cricket alone. There were also a dozen sites for youth and fifteen that targeted Indian women
Sukeshi Sondhi set up India's first portal for women, Icleo.com. Now her site is one of the few women's portals to survive. She says it still takes a long time to connect to the net in India, which explains the country's dotcom meltdown:
"What is happening now is the clean up exercise and some of the key players will remain, and I think the rest will either have to just melt away or they will have to look at alternate revenue streams," says Sondhi.
The dot dotcom businesses that are failing have no operating money left. Some e-businesses spend millions in advertising without assessing where they'll make their next dollar.
Venture capitalist funding also dried up as Internet stocks listed on the US-based NASDAQ exchange were hammered.
For all the pain, stress and uncertainty associated with the shake out, analysts say the industry has evolved.
"It has galvanized the young generation with a can do attitude as everyone could do something on the net and they have become more mature and learnt a lot from their trials,'' says venture capitalist Abhay Hawaldar. These days, Manish Sharma is trying to get back on his feet by selling some of his intellectual property. And while he may have run out of money, Sharma says he definitely hasn't run out of hope. "Everyone is down but nobody is out. The spirit is there. The tie of sadness has gone down from a couple of months ago when it really hit us," he says.
Sharma now plans to migrate to the US where his programming skills are in high demand. As he mulls over the past with his friends -- who're also looking for work -- Sharma says his hard work has not been in vain.
In his own small way he's helped to build the Internet in India. Something he's convinced is here to stay.
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