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Venture Capital Investments Rising in India

ST Team
Monday, November 2, 2009
ST Team
Weathering the financial meltdown, several venture capital (VC) firms are ramping up investments to increase the portfolio with Indian companies. The venture capital investment figures have surged. The Indian companies witnessed about 20 percent rise in venture capital funding, in the third quarter this year, and it is poised to grow in the coming months as well, according to a report.

The data compiled by the research firm Venture Intelligence in association with Global-India Venture Capital Association (GIVCA) shows that VC firms invested up to $77 million (around Rs. 360 crore) over 17 deals in India during the third quarter. In contrast, during the April-June quarter VC funds invested only $64 million across as many deals. The latest numbers take the total VC investments in the first nine months of 2009 to $201 million (across 46 deals) as against the $709 million (across 124 deals) during the corresponding period in 2008.

“Liquidity position of the limited partners is improving and by December quarter we will see funding returning to 2006 levels, wherein investments were at a more sustainable level,” says Venture Intelligence Chief Executive Arun Natarajan.

Among the largest investments reported, investment during Q3 2009 was the Lightspeed Venture Partners-led investment of Rs. 500 million (about $10 million) in the Mumbai-based ItzCash Card, India’s largest multi-purpose pre-paid card company. IT and ITeS companies accounted for 41 percent of the investments during Q3. Also, the research firm reported that early stage deals (First or Second Round of VC investments into companies that are less than five years old) accounted for 60 percent of the VC investments during Q3.

“The return of confidence in emerging markets in general, and India in particular, is now getting reflected in the quarter-on-quarter numbers. Going forward, we expect the investing momentum to pick up even further,” says GIVCA Director Sudhir Sethi.

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