VCs focus on non-tech sectors

Mumbai: Venture Capital (VC) funds are now shifting their focus from technology and moving towards businesses related to consumer demand such as education, media entertainment, food and beverages and alternative energy, reported Business Standard.

Many VC firms have recently made investment in various sectors other than technology. For instance, Matrix Partners India invested $ 7 million in pre-school educator Tree House Education and Accessories. Similarly, Helion Venture Partners invested $4 million in Humming Bird Suites, a Bangalore-based service apartment operator.

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Kanwaljit Singh, CEO, Helion Partners, said "We are looking at India-focused consumer demand-related businesses such as retail services, education and financial services along with internet, mobile and outsourcing."

Rahul Khanna, Head, Clearstone Venture, said that non-tech firms such as service providers have the same underlying outcomes as tech companies. The company has so far invested in logistics, games and payment and management solutions. "Here one has more freedom to change the vertical as the company's performance is known in six months, whereas tech companies start showing results in two years," he added.

Moreover, Nexus India Capital, which had earlier focused on technology, has now invested in farming company Suminter India Organics, which focuses on organic produce for textile and food industries. Sandip Singhal, one of the team members, said that it will continue to focus on other areas as well from its new fund.

Arun Natarajan, CEO and Founder, Venture Intelligence, opined that the VC industry is looking for people with expertise of particular sectors as the industry is expanding. "Earlier 90 percent of the total fund was invested in technology, which has now come down to 70 percent," he said.
Despite the slowdown in the economy, VC funds have managed to make 20-25 investment in each quarter and looking at entering into newer deals.

However, focus of some firms like IDG Venture and Walden still remains on technology. "We will continue to invest in technology only, though there are opportunities in other sectors," said Sudhir Sethi, Chairman and Managing Director of IDG Ventures.