VCs invest $928 Mn in India in 2007, 166 percent up

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Bangalore: Venture capitalists invested about $928 million in 80 deals for entrepreneurial companies in India during 2007, according to the Quarterly India Venture Capital Report published today by Dow Jones VentureSource. This was a whopping 166 percent increase over the $349 million invested in 36 deals in 2006 and easily the highest total on record for the region. The report found nearly 48 percent of all venture financing deals in India were for Information Technology (IT) companies, as 38 rounds were completed, accounting for $384 million, more than India's entire 2006 venture investment total. The most popular recipients of venture capital in the IT industry were companies in the Web-heavy "information services" sector, which accounted for 22 deals and nearly $141 million in investment. Among the deals in this area was the $10 million second round for Bangalore-based Four Interactive, an online provider of local information on food, events, lifestyle, shopping and more. "Service-oriented companies in India - both in the technology fields and the non-technology areas of hotels, taxis and similar services - continue to attract investment and this is likely due to their low capital requirements as well as to the rapidly emerging nature of the broader Indian economy," said Jessica Canning, Director of Global Research for Dow Jones VentureSource. According to the data, the overall business/consumer/retail industry saw 30 deals completed in 2007 and more than $346 million invested, a 92 percent jump over the $180 million invested in 16 deals in the industry in 2006. As said, the business/consumer service area accounted for the bulk of the interest in this industry, with 22 deals and $254 million invested. India's health care industry, while still in its infancy, also saw increased investor interest in 2007 with seven completed deals and nearly $100 million invested, more than double the $41 million invested in the prior year. In fact, the median size of a venture capital round for companies India was $9 million in 2007, up slightly from $8.7 million in 2006 but well below the $18.8 million median seen in 2005. Of all the companies in India that received venture funding in 2007, nearly 73 percent were already generating revenues or profitable.