Dow Jones VentureSource Shows Annual VC Investment Skyrockets 166%;
Consumer/Business Services & Web-Related Companies Account for More than
Half of All Deals
BANGALORE, Mumbai and NEW DELHI, Feb. 21 /PRNewswire/ -- Venture
capitalists invested some $928 million in 80 deals for entrepreneurial
companies in India during 2007, according to the Quarterly India Venture
Capital Report published today by Dow Jones VentureSource. This was a
whopping 166% increase over the $349 million invested in 36 deals in 2006
and easily the highest total on record for the region.
The report found nearly 48% of all venture financing deals in India
were for Information Technology (IT) companies, as 38 rounds were
completed, accounting for $384 million, more than India's entire 2006
venture investment total. The most popular recipients of venture capital in
the IT industry were companies in the Web-heavy "information services"
sector, which accounted for 22 deals and nearly $141 million in investment.
Among the deals in this area was the $10 million second round for
Bangalore-based Four Interactive, an online provider of local information
on food, events, lifestyle, shopping and more.
"Service-oriented companies in India -- both in the technology fields
and the non-technology areas of hotels, taxis and similar services --
continue to attract investment and this is likely due to their low capital
requirements as well as to the rapidly emerging nature of the broader
Indian economy," said Jessica Canning, Director of Global Research for Dow
Jones VentureSource, "It takes relatively little money and little time for
these kinds of companies to begin generating revenues and, because of this,
Web-related and consumer and business services companies accounted for more
than half of all the venture capital deals done in India in 2007."
According to the data, the overall business/consumer/retail industry
saw 30 deals completed in 2007 and more than $346 million invested, a 92%
jump over the $180 million invested in 16 deals in the industry in 2006. As
said, the business/consumer service area accounted for the bulk of the
interest in this industry, with 22 deals and $254 million invested.
India's health care industry, while still in its infancy, also saw
increased investor interest in 2007 with seven completed deals and nearly
$100 million invested, more than double the $41 million invested in the
prior year.
"This is only the beginning for the venture capital market in India,"
said Ms. Canning. "In 2007, 79% of all deals in India were for seed and
first rounds and a lot of these companies will continue raising venture
capital as they progress toward profitability and liquidity. And because
the majority of investment is going to early-stage companies, we aren't
seeing ballooning deal sizes like those in the U.S. and Europe where
investors are focused more on later-stage companies."
In fact, the median size of a venture capital round for companies India
was $9 million in 2007, up slightly from $8.7 million in 2006 but well
below the $18.8 million median seen in 2005. Of all the companies in India
that received venture funding in 2007, nearly 73% were already generating
revenues or profitable.
The Quarterly India Venture Capital Report covers venture capital
investment specifically, which Dow Jones VentureSource defines as growth
capital made available to entrepreneurial companies in exchange for
ownership in the form of private securities. These investments are often
seen as shorter-term and do not include private equity investments such as
leveraged buyouts or mezzanine and debt financing.
The investment figures included in this release are based on aggregate
findings of VentureSource's proprietary Indian research and are contained
in VentureSource. This data was collected by surveying professional venture
capital firms, through in-depth interviews with company CEOs and CFOs, and
from secondary sources. These venture capital statistics are for equity
investments into early-stage, innovative companies and do not include
companies receiving funding solely from corporate, individual, and/or
government investors. No statement herein is to be construed as a
recommendation to buy or sell securities or to provide investment advice.
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