Menlo Park, California-based venture capital (VC) firm Canaan Partners hopes to invest at least 25% of its $650 million (Rs2,561 crore) eighth fund in India and Israel.
The firm, which has just closed the fund, will accelerate investment activities in India next year.
“We want to develop markets (outside the US) where we can exploit our expertise and get the biggest returns,” says John V. Balen, general partner, Canaan Partners. The VC firm, which has offices outside the US in India and Israel, had invested 10% of its previous fund of $450 million in these markets. Canaan Partners manages nearly $2.4 billion.
The larger fund size combined with an increased focus on investments outside the US, will lead to more investments in India, Balen added.
The firm does not have a dedicated India corpus, and has no plans of raising one in the near future either. Instead, Canaan prefers to invest out of its global corpus for all markets. To manage an increasing number of deals, Canaan will appoint another venture partner to its India investment team in January.
Alok Mittal, Canaan’s executive director who sold his jobs portal, Jobsahead.com, to Monster.com in 2004, is tasked with handling all investments in India.
Canaan set up its India office in Gurgaon two years ago, a few months after it opened its Israel office in December 2005. Since then, the VC firm has invested in four companies in India and two in Israel.
Its India investments are in Consim Info Pvt. Ltd, which owns matrimonial site Bharatmatrimony.com, remote desktop support company iYogi Technical Services Pvt. Ltd, jobs referral portal TechTribe Networks Inc. and digital media company Cellcast Asia Holdings.
Canaan’s new fund, which would be invested over the next three years, will continue to focus on core sectors, such as consumer Internet and wireless technologies, enterprise and managed services, and health care.
About one-third of its deals will be in health care firms. Canaan will also look at clean technology deals globally. In India, however, health care and clean technology will not be key areas of focus. The firm has fully committed its seventh fund across 37 deals in the three markets. Unlike many of its Silicon Valley-based peers, Canaan does not have a presence in China. Instead, it plans to strengthen its investments in existing markets before exploring others. Canaan is also looking to tap the emerging “Indo-Israel corridor”. “We are beginning to exchange between the (two markets),” says Deepak Kamra, general partner, Canaan Partners. “Israel has expertise in wireless and software security technologies, which is applicable to India.”