Mumbai: Silicon Valley venture capital firm Norwest Venture Partners is adding more people in its India office and looking for deals outside technology firms too, a senior company official said on 6 November.
Norwest, which has made investments in five Indian firms including Mobile2Win, portal Sulekha.com and online travel firm Yatra, sees the Indian market being more conducive than China because its markets are better regulated, a top official said.
“It’s a lot easier to do business in India than China because there’s more liquidity here and the stock market is more robust and more transparent,” managing partner Promod Haque said.
“That’s key, because investors ask, ‘Can we take the company public easily?´,” he said at the sidelines of a technology conference.
Norwest, which manages $2.5 billion (Rs9,838 crore) in venture capital, recently hired a head for its India office and will add two more people, and look for deals outside technology firms as well, Haque said.
“There’s a very high demand for venture capital in India, but the industry is in a formative stage,” he said. “Besides consumer Internet and second-generation services, we will also look at actual products, look at auto components and infrastructure, but perhaps as late-stage investments, and not early-stage funding,” he said, adding the investments will be made from its $650 million global fund.
A credit squeeze in the U.S. financial markets was not impacting venture capital deals, he said, although newer firms were finding it harder to raise funds.
“The deals we’re looking at, liquidity is not an issue, and debt is a very small part as we don’t do big leveraged buyouts,” Haque said.
“But are there too many venture firms out there? Yes. And newer firms without a track record are finding it harder to raise funds and are going to fall by the wayside. So you’re going to see some contraction in the industry,” he said.
Venture capital firms were also shifting their focus from just Silicon Valley and looking at emerging markets such as India and China, as there was an abundance of engineering talent as well as large domestic consumer markets, he said.
“Ten years back it was inconceivable that we would have an office here in India, but 10 years form now, we would already have offices in India, China, maybe Vietnam and Israel,” he said.