Venture Capital firms invested $543 million across 98 deals in India during 2007, according to a study by Venture Intelligence in partnership with the US-India Venture Capital Association. The amount invested during 2007 was slightly higher compared to 2006, which had witnessed 94 deals amounting to $500 million.
"With early stage investments accounting for about 66% of all investments during the year, the resurgence in seed and first round investments has been a key highlight of 2007," said Arun Natarajan, Founder & CEO of Venture Intelligence, a firm that tracks venture capital and private equity investments.
Over 50% of the VC investments during 2007 were below $5 million including 23% below the $2 million threshold, the US-IVCA/Venture Intelligence study showed.
"With strong interest among limited partners in both the VC segment as well as India as a destination, the resurgence in early-stage investments is likely to be sustained going forward as well," said Mr Sudhir Sethi, Director of US-IVCA and Founder, Chairman & Managing Director of IDG Ventures India. The US-India Venture Capital Association (US-IVCA) is an association of US-based venture capitalists interested in US-India cross-border investments.
With 65 investments worth about $377 million, the Information Technology and IT-Enabled Services (IT & ITeS) industry retained its status as the favorite among VC investors during 2007, the study indicates. Within IT & ITeS, Online Services companies were the favorite sector accounting for 31% of the investments, followed by BPO, IT Products and Mobile VAS companies. IT and ITeS was followed by healthcare, life sciences and the media & entertainment industry.
Sequoia Capital India continues to be the most active VC investor in India with nine investments during 2007. Sequoia ventured beyond IT & ITeS to invest across a range of sectors including Clinical Research Outsourcing, Micro finance, Out of Home media and Printing Services. Helion Ventures and Erasmic Ventures were the next most active investors during 2007 participating in at least eight investments during the year, the survey indicated. Five of Helion's investments during the year went into outsourcing companies providing either IT or BPO services. Erasmic invested across both tech and non-tech sectors including in retail/consumer services companies.
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