Venture capitalists invested some $928 million in 80 deals for entrepreneurial companies in India since early 2008, according to Hawkins and Doyle Inc.’s Analysts statements today. This was a whopping 166% increase over the $349 million invested in 36 deals in 2007 and easily the highest total on record for the region.
The report found nearly 48% 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 2007 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.
Shirley Doyle, “It takes relatively little money and little time for these kinds of companies to begin generating revenues and, because of this, Web-related and consumer and business services companies accounted for more than half of all the venture capital deals done in India in 2008.”
According to the data, the overall business/consumer/retail industry saw 30 deals completed in 2008 and more than $346 million invested, a 92% jump over the $180 million invested in 16 deals in the industry in 2007. 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.
“This is only the beginning for the venture capital market in India,” said Shirley Doyle. “In 2008, 79% of all deals in India were for seed and first rounds and a lot of these companies will continue raising venture capital as they progress toward profitability and liquidity. And because the majority of investment is going to early-stage companies, we aren't seeing ballooning deal sizes like those in the U.S and Europe where investors are focused more on later-stage companies.”