When terrorists attacked The Taj Mahal Palace and the Oberoi-Trident in Mumbai, they struck at the heart of venture capitalism in India. As Ken Schachter pointed out over at Red Herring late last month, some of the most prominent firms in U.S. venture capitalism have offices in Mumbai, including Sequoia Capital, Battery Ventures and Matrix Partners. The two hotels that were hit are among the favorite places for firm employees to stay when in Mumbai.

VC Investment in India was already on a downward trend. That's bad for India, considering that VC funds are still spending big in neighboring China. Before the attacks, Indian VC investment was down 43% compared to last year, while China VC investment is now higher than it's ever been.

Of course, everyone has hired more security guards. And there are other ways to have a meeting than flying in and spending the night in Mumbai; but if you feel compelled to video conference, will you invest money in a place you're scared to go to?

The terrorist attack in Mumbai's financial district will probably echo in the minds of Western venture capitalists for a long time...


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