Indian cos see $77 mn VC funding in July-Sept

Indian cos see $77 mn VC funding in July-Sept

New Delhi: Venture capital investment in Indian companies rose by 20% to $77 million (around 360 crore) in July-September this year and is poised to grow in the coming months, a report has said.

Venture capital (VC) firms invested $77 million over 17 deals in India during the third quarter of 2009, the data compiled by research firm Venture Intelligence in association with Global-India Venture Capital Association showed.

During the April-June quarter, VC funds had invested $64 million across 17 deals.

“Liquidity position of the limited partners is improving and by December quarter we will see funding returning to 2006 levels, wherein investments were at a more sustainable level," Venture Intelligence chief executive Arun Natarajan said.

Although no new funding is expected, existing investors would shore up investments and by next year we might see total deals valued at $200 million across 15-20 deals, he said.

“The return of confidence in emerging markets in general and India in particular is now getting reflected in the quarter-on-quarter numbers. Going forward, we expect the investing momentum to pick up even further," GIVCA director Sudhir Sethi said.

Despite the positive sentiment returning in the VC space, investment are still low on an year-on-year basis.

During the July-September quarter last year, VC firms have invested $298 million across 55 deals, the highest ever quarterly investment so far.

“Year-on-year figures are likely to improve in the December quarter. Investments to the tune of $100 million would be good enough to surpass previous year’s figure," Natarajan said.

The first nine months of the year saw 46 VC deals valued at $201 million, against 124 deals worth $709 million in the same period last year.

A VC firm invests in a start-up business that is perceived to have excellent growth prospects but does not have access to capital markets. Type of financing sought by early-stage companies seeking to grow rapidly.

Among the largest investments reported investment during Q3 2009 was the Lightspeed Venture Partners-led investment of $10 million (about Rs50 crore) in Mumbai-based Itz Cash Card, the data showed.

Information technology and IT-enabled services companies attracted investments of about $32 million via seven deals, followed by the BFSI industry which got $25 million across five deals.