Even as venture capitalists and private equity players are combing the Indian landscape for deals, here comes competition from least expected of sources.
Enter beedi manufacturers and jewellery merchants who are sitting on huge piles of cash and are actively scouting for entrepreneurial start-ups.
Many may argue that these funders may not add value to the companies they finance, but some entrepreneurs are happy as these people will not breathe down their necks as some VCs do.
Instances of such companies scouting for investing in technology start-ups are starting to grow and they are happy to come once in a quarter to a board meeting to review the progress.
Said a tech entrepreneur in Bangalore who is about to sign a deal with a Maharashtra-based beedi manufacturer: "Unconventional routes are on the rise. A lot of entrepreneurs are exploring such options, keeping in mind that there isn't much interference from VCs on the board."
According to industry sources, some of these traditional companies are sitting on a cash pile of at least Rs 200 crore (Rs 2 billion) each and are looking out for investment opportunities.
"Given the strong growth the technology sector is witnessing in India, they are approaching us. I would be happy to finalise equity infusion from them, given that I have built my network and have the people who will advise me best," said a promoter of a software product start-up.
For over a decade, VCs have been investing in Indian companies aggressively and more often than not, there has been a love-hate relationship between the VC and entrepreneurs.
The oft-quoted term entrepreneurs use for VCs is vulture capitalists, who just want their pound of flesh and that too in a short amount of time. This is indeed true given that when a VC raises around $150 million from various sources, they are under pressure to return at least $500 million.
Put these arguments to any VC, a standard reply is: "We have the global network of connecting our investee companies to clients and give them a window to the world as they globalise. Entrepreneurs certainly benefit from us being on the board. Our experience cannot be matched by either a beedi manufacturer or a gold merchant."
The discussion is out there in the marketplace on how the competition from such sources will help the growth of the technology industry. At least, one thing to be noted is this. India's third largest software exporter was started by a vegetable oil company.
