Venture capital investment in India saw a drop of 43 per cent to $475 million (around Rs 2,166 crore) over 92 deals for the calendar year 2009, said a study by Venture Intelligence in partnership with the Global-India Venture Capital Association.
Venture capital firms however begun to increase their pace of investments in the fourth quarter (October - December) of 2009, making 42 investments worth $265 million - a number significantly higher than that during the same period in 2008 (23 investments worth $102 million) as well as third quarter of 2009 (19 deals worth $74 million). The total investement was $836 million across 153 deals in 2008.
“During 2010, we expect significant follow-on investments into companies that raised Series A rounds in the past two- three years as well as a rise in exit activity as the global economic recovery gathers pace,” said Sudhir Sethi, Director of GIVCA and Founder, Chairman & Managing Director of IDG Ventures India.
While Information Technology and IT-Enabled Services (IT & ITES) industry retained its status as the most preferred during 2009, the industry’s share has declined to about 43 per cent (from about 55 per cent during 2008). Within IT & ITES, online services companies retained their status as the favourite sector accounting for about 39 per cent of the investments during 2009.
Other industries that attracted significant investor attention during the period included financial services (led by microfinance deals), healthcare and life sciences, and alternative energy.
Companies based in South India accounted for 50 per cent of all venture capital investments (47 per cent by value) during 2009. Their peers in Western India accounted for 25 per cent of the pie in 2009 (29 per cent by value). Companies based in North India accounted for 15 per cent of the investments in 2009 (12 per cent by value).
Among cities, companies headquartered in Bangalore and Mumbai were the favorite among venture capital investors during 2009 with the former and the latter attracting 29 and 15 investments respectively. The Delhi National Capital Region (including New Delhi, Gurgaon and Noida) accounted for 11 investments followed by Hyderabad with nine.
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