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VC funding in each firm may shrink to $3 Million
By siliconindia
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Bangalore: The value of VC funding in India is likely to come down to the tone of $3 million in each firm as result of the ongoing recession, while companies with bright idea will continue to receive VC funding amidst slowdown, reported Financial Chronicle, quoting some of prominent personalities in VC sector.
IDG Venture claims that they have approached by some 1,200 companies over the last two years. Sudhir Sethi, company's Managing Partner said, "I haven't seen any slowdown in the past six months, when there has been an economic slowdown either." However, he cautioned that the average deal size will shrink. Usually, Indian start-ups receive VC funding to the tune of $5-7 million at an early stage. But, the amount may go down to $3 million range, as VCs look for quicker and safer returns.
He also pointed out that about 60 percent of the companies getting funding are from technology sector. "We are looking at disruptive technologies that break new ground. Healthcare is definitely one sector that has been receiving a good look-in," he added.
Venture Intelligence, a VC tracking firm observes that since January 2006, VCs invested $2.17 billion across 366 deals in India. VC funding had touched 873 million through 142 deals in 2007. In this year, during the January-October period, the country witnessed early stage investment worth $672 million from 112 deals.
Helion Ventures Managing Director Ashish Gupta said it was only a matter of ground-breaking ideas which can offer sustained results. "There are enough funds floating around," he said. The company had announced a $120 million fund in March, but most of that remain unused. But he too was wary about the quantum of funding.