'Funds flooding into India'

The number of venture capital and private equity funds targeting Indian companies is on the rise.

In fact, there seems to be increased competition among funds for investing in Indian companies, said industry representatives at the TiE-ISB Connect 2006 in Hyderabad today.

Indian companies are estimated to have got more than $2,000 million worth of venture capital and private equity funds from April to June 2006. Srini Raju, managing director of iLabs Capital P Ltd, said that India had become the flavour of the season.

"Industries like IT, telecom, banking, insurance and construction have already been declared as winners. Up for grabs are healthcare and life sciences, retail, logistics and distribution services," he added.

While admitting that there were more VCs than entrepreneurs in the country today, Ajit Balakrishnan, founder of Rediff.com, said that companies need to be innovative with their business design and technology.

Some of the potential areas of innovation could be document retrieval from spoken conversations, singer identification in music databases, collaborative filtering and the likes, he said, adding that city-specific portals did not have much scope for growth as search and e-mail, which are the main drivers of Internet business are not city-specific.

According to Sandeep Murthy, partner with Sherpalo Ventures, while investors have seen success in India, budding entrepreneurs need to ensure that there is a market for the groundbreaking technology that they have on offer.

Hitesh Oberoi, chief operating officer of Naukri.com, however, said that if the product was compelling enough, a market could be created.