US vencap funding halves globally, down 29% in India

American venture capital (VC) investment globally halved in the March quarter of 2009, dipping to a five-year low of $1.87 billion, while in India, it was down by 29 per cent.

In India, US venture capitalists invested $101 million in 13 deals in the first quarter, 29 per cent less than the $142 million via 22 deals in the March quarter of 2008, as per data compiled by research firm Dow Jones VentureSource.

Venture capitalists put $1.87 billion, the lowest quarterly total since 2004, via 250 deals for emerging companies in India, China, Europe and Israel in the first quarter as fund managers prefer assured returns from portfolio investment.

VC investment in this region in the March quarter of 2008 stood at $3.65 billion through 430 transactions.

In terms of average deal value, India ranked the second-most expensive destination, after China, in the emerging markets with the median deal size of over $4.2 million in the quarter.

“VCs are faced with challenges on both ends of the investment lifecycle, as liquidity markets are virtually shut down in the face of the economic crisis and cash-strapped limited partners are reluctant to back new venture funds without a clear promise of returns,” Dow Jones VentureSource Director (Global Research) Jessica Canning said.