VC funding set to revive in India

By agencies   |   Monday, 09 May 2005, 19:30 IST
Printer Print Email Email
MUMBAI: Early stage venture capital funding is all set to revive in India after a lull of almost three years. The early stage funding had almost vanished after the Y2K bust. The revival in start-up funding will be fuelled by the arrival of several U.S.based VC firms such as Oak Investment Partners, Kleiner Perkins, Battery Ventures, Bessemer Venture Partners, New Enterprises Associates, and Matrix Partners. Some months ago, Battery Ventures made its first Indian investment in Tejas Networks, a Bangalore based telecom infrastructure provider. It will also open an office in India soon. Cisco has just opened an India specific VC fund in India headed by Samip Mehta. Others such as Bessemer, Matrix, and Norwest Venture Partners are scouting for investments here. “Next 6-12 months will see a lot of early stage deals. These will be funded by U.S. VCs and the top Indian players,” says K P Balaraj, Managing Director, Westbridge Capital Partners, one of the very few private equity funds in India still doing early stage venture capital funding. Rahul Bhasin, Senior Managing Partner, Baring Pvt Ltd says, ”Definitely, if you are an entrepreneur with an idea, the funding situation is better as compared to three years ago. The risk return ratio for early stage funding is much more favorable now.” Adds Ashish Dhawan, Senior Managing Director, Chrys Capital: “After Israel, India and China are the next big stories for the global VC industry.” U.S. venture capitalists are even more bullish. In one of its recent newsletters, Battery has identified India as the next hub for global VC investments and has said that in order to be a significant VC in the next decade, “You will have to create and execute a strategy towards China and India.” This certainly is good news for Indian entrepreneurs, scientists and executives with good ideas but little cash. VC funding in India had dried down after the tech meltdown of 2000-01, when funds such as Actis, Chrys Capital and Citicorp withdrew from early stage investments and focused on investing in listed companies.