UPDATE:VCs bullish on stepping up investments into India: Deloitte

With the global venture capital industry showing signs of recovery, investment levels into India are expected to increase the most compared to others in the Asia-Pacific region over next three years, says a survey by Deloitte.     

According to Deloitte's 2009 Global Venture Capital Survey, India and China are two countries that are expected to gain the most in terms of economic stature, with as many as 43 per cent respondents expecting to increase their investments into the country over the next three years.     

"... Most respondents were of the opinion that the investment levels in India are expected to increase the most as opposed to other Asia-Pacific regions," the survey said.     

In Asia (excluding India) half of the respondents believe their investment levels to increase, while 43 per cent expects to step-up inflows into India over next three years.     

Interestingly, as many as nine out of 10 US VCs are also increasing or maintaining their investments in Asia and India and about the same number of respondents from Asia Pacific have similar plans, the survey added.     

"In India, too, VC funding has fallen nearly 25 per cent on account of global slowdown, but there are visible signs of recovery. There may have been a dip in number of deals however the quality of deals has improved. Considering this, the market sentiment is expected to pick up sooner than expected," Deloitte India Senior director Kalpana Jain said.

Despite, the world struggling with a recession, VCs are remarkably optimistic about their future funds. Most VCs believe that their next fund would be either larger than their existing fund or would be approx the same size.

China remains a clear favourite among US investors with 42 per cent respondents saying that the country has the most to gain. About 24 per cent respondents held the same conviction for the US followed by 12 per cent for India, Brazil (5 per cent)and Russia (2 per cent).

The survey, which measured the opinions of more than 700 venture capitalists worldwide, also shed light on the post- recession landscape.

In terms of sector, the cleantech industry (refers products or services that improve operational performance, while reducing energy consumption and pollution) is poised to become leading investment category globally as well in India.

A majority of VCs anticipate stable levels of investment across all industry sectors. In cleantech industry as many as 63 per cent respondents expect to increase their investments over next three years, the survey revealed.

The medical device sector ranks second with 37 per cent of respondents anticipating increases in investment.

The globalisation of the venture capital space would also intensify going forward and may pose significant competitive questions for the US and opportunities for emerging markets such as China and India.