Canaan Partners invests in Delhi start-up

Having been quiet for almost nine months since its joint investment in BharatMatrimony.com ($8.65 million along with Yahoo!), Canaan Partners has now invested around $2-5 million in a Delhi start-up that provides remote desktop services for US and UK customers.

Without divulging details, Deepak Kamra, general partner, Canaan, said: "We are closely looking at start-ups in the Internet and product development space. Even if the models are cloned from the West, we insist on a high level of localisation."

He, however, added that Web 2.0 companies are not on his "priority list". "Yes, there is a frenzy in the US over these models such as YouTube clones etc. However, we are excited only about transaction-based models."

Since Canaan Partners is an early stage venture investor, it invests $2-5 million in the first phase and around $15 million in the next stage. All the companies identified are technology-based -- a trend the investor would be following even as it looks at start-ups in services and telecom.

The company, which came to India in 2006 by establishing an office at Gurgaon, is consolidating its presence in the Indian market by planning to set up two more offices this year.

"Canaan was an early-stage investor in successful US-based Internet companies such as DoubleClick, CommerceOne, Match.com and Blue Frog Mobile. We believe similar opportunities exist in India. Considering the retail and telecom boom in India, we will surely see a lot of venture capitalists setting up shop in the country," said Alok Mittal, managing director of Canaan Partners.

In 2000, the venture capital (VC) firm had invested in Aztec Software, a software development firm, and in e4e, a diversified business-outsourcing firm. Having identified the potential of the nascent VC market in India, the company decided to take the early mover advantage, which, Mittal says is set to continue at least for the next six to seven years.

Canaan Partners' Israel office near Tel Aviv is among the fastest growing centres for the firm.

"In Israel, we have invested in very innovative technologies, especially in the defence sector and are looking at many exciting new ones," said Mittal.

He added that Israel was emerging as one of the most attractive countries for venture capitalists with almost 20 seed and venture deals everyday, compared with two or three in India, which lags far behind the US, where close to 70 deals take place a day.