Draper Fisher to raise $400 mn for start-ups

Draper Fisher Jurvetson, the venture capital firm that backed Skype and Baidu Inc, expects to raise as much as $400 million by March to invest in startups in India, China and the US.

The company may invest about 15 per cent of the funds in India, Mohanjit Jolly, executive director of DFJ’s Bangalore-based Indian unit, said in an interview yesterday.

DFJ, which has invested about $75 million in 18 Indian companies since 2005, has completed raising half of the proposed amount, Jolly said.

Venture capital firms and private equity companies are seeking to restart fundraising after a two-year slump triggered by the global credit crisis. India and China, whose economic growth is forecast to outpace the rest of the world, are attracting the fresh investments, helping the MSCI Asia Pacific Index rally more than 30 per cent this year.

Venture capital funding is coming back “strong,” Alan Patricof, founder and managing director of Greycroft Partners LLC, said in an interview on November 23.

“Pure venture capital, which is early stage companies, has really never been stronger.”

Norwest Venture Partners, based in Palo Alto, California, raised a $1.2 billion venture-capital fund, the biggest to be completed this year, to expand in Israel and India, while San Mateo, California-based Greylock Partners raised $575 million to back startup companies.

DFJ expects to invest as much as $20 million a year in India, whose benchmark stock index is headed for its best performance in 18 years following a 78 per cent advance this year. The firm has invested in India-focused companies including travel website Cleartrip.com and Reva Electric Car Co, which has a tie-up with General Motors Corp to sell electric cars.

“India has been and will be a story of growth for decades to come,” Jolly said. “Just hold on and ride it.”

The Menlo Park, California-based firm is raising almost 40 per cent less than its previous fund. Smaller pools of capital are easier to manage and can help investors recover their money faster, Jolly said.