Kolkata: When Scott Adams, famed creator of the Dilbert cartoon strip, recently said that recession is often a perfect spawning ground for serious entrepreneurs, he may have been alluding to what he saw back home in the U.S. But India may also have gravitated to the same league, according to the venture capital flock.

So much so, the number of high-value business proposals have actually surged in India since slowdown began. Indian Venture Capital Association (IVCA) - the apex organization of venture capital and the private equity industry in India - estimates that if, in the pre-recession era, average seed funding size was around $1.5-2 million, it has now risen to $2.5-5 million, reports Economic Times.

Indications are that this may rise further as the economy bounces back by mid-2010. "In the last one year, the number of business proposals for angel or early stage funds has definitely come down, weeding out the non-serious entrepreneurs. And a serious business plans will invariably require much higher funding," says IVCA President Mahendra Swarup.

Industry estimates suggest that total VC funding deals in India have already touched $600 million in the January-September period, as compared to an average of $500 million deals which used to take place annually before the slowdown. This is despite the fact that the number of cumulative deals has come down to 150 this year till September compared to the usual 250-260 a year, says Swarup.

For instance, IFCI Venture Capital Funds has already evaluated more than 150 proposals for seed funding this year. It has already closed nine deals and hopes to close four more this quarter. "With the downturn in capital markets in 2008 and the first half of 2009, there was a definite shift, with promoters leaning more towards PE deals than IPOs and QIPs. Things may have changed in the past 6-8 months with public market valuations rising dramatically. But in the start-up stage, more often than not, promoters still prefer seed capital," says IFCI Venture Capital MD BN Nayak.

The new business proposals are across sectors with thrust on sectors like IT, ITeS, internet, new media, FMCG contract manufacturing, packaged food, logistics, infrastructure, utilities and education.

As Nayak puts it, "The Indian VC industry is different from the U.S., where venture capitalists back mostly technology product start-ups for super-normal returns. In India, there are numerous opportunities across industries that can grow 100-200 percent year-on-year and provide 4-5 times returns on investments."

Intel Capital MD (India, Japan, Australasia and South-east Asia) Sudheer K Kuppam said the pace of activity had gone up since July. "There is an enhanced deal flow in the last couple of months. There is also a lot of interest to get 3-4 companies in our portfolio listed next year," he says. Intel Capital, which in 2008 had invested $50-million in India in nine deals, has completed four deals this year with a few more in advanced stages.