As Venture Money Floods India, Two New England Firms Are Among Top Investors

2/21/08Follow @wroush

A report from Dow Jones VentureSource shows that venture capital investment collected by entrepreneurs in India nearly tripled in 2007, totaling $928 million across 80 separate deals, as compared to just $349 million for 36 deals in 2006. It was “easily the highest total on record for the region,” according to the Dow Jones report,  which was released today. Some 48 percent of the funding went to information technology companies, and two IT-focused New England firms, Waltham, MA-based Matrix Partners and Westport, CT-based Canaan Partners, were among the top 10 venture firms sending money to India, closing five deals between them.

Within India’s IT sector, Web-based information services companies captured the biggest chunk of venture cash, accounting for 22 deals worth almost $141 million. ItzCash, the Mumbai-based company behind a new form of pre-paid cash card, is a prime example. With a $10 million investment from Matrix Partners and Intel Capital, ItzCash has created a system that allows Indian consumers to load their cards with 100 to 10,000 rupees (about $2.50 to $250) and use the cards to pay in person, online, or via text messages for things like Internet access, online shopping, utility bills, railway tickets, insurance, and even donations to Hindu temples.

“Service-oriented companies in India….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,” Jessica Canning, Dow Jones VentureSource’s director of global research, said in the company’s release today. “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.”

While U.S.-based venture firms still lead the way when it comes to investing in Indian entrepreneurs, investors from other countries are gaining interest. U.S.-headquartered VC firms led 52.5 percent of the Indian venture deals in 2007, compared to 64 percent in 2006 and 60 percent in 2005, Dow Jones reported.

Here’s the list of the top 20 investors placing equity-based venture investments in Indian companies in 2007. (All data courtesy of Dow Jones Venture Source.)

Name Type of Fund Number of Deals
Draper Fisher Jurvetson Venture Capital 7
IDG Ventures India Venture Capital 6
Intel Capital Corporate VC 5
Sequoia Capital Venture Capital 4
Erasmic Venture Fund Venture Capital 3
Matrix Partners Venture Capital 3
Velocity Interactive Group Venture Capital 2
Canaan Partners Venture Capital 2
Carlyle Group Private Equity 2
SVB Financial Group Investment Bank 2
Clearstone Venture Partners Venture Capital 2
UTI Venture Funds Venture Capital 2
GVFL Venture Capital 2
Temasek Holdings Other 2
ICICI Venture Funds Management Venture Capital 2
Silicon Valley Bank Other 2
SIDBI Venture Capital Venture Capital 2
Individual Investors Angel Investor 2
New Enterprise Associates Venture Capital 2
Kleiner Perkins Caufield & Byers Venture Capital 2

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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  • http://epsos.de Azalia Short

    Quite interesting that the major investments are made in the hi-tec. business areas.

    I think people see India as a way to buy talent and intellect for cheap money.

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