Indian Snares $540 million In Venture Capital In 2007

BENGALURU, India — Venture capitalists invested $543 million in 98 Indian deals during 2007, according to a VC researcher.

Venture Intelligence, an Indian-based VC and private equity tracking firm, found that the 2007 investment total was slightly higher than 2006, when 94 deals attracted about $500 million.

Bengaluru and Mumbai companies were the favorites among VC investors during 2007. The former attracted 29 investments and the latter 24.

"Early-stage investments accounted for about 66 percent of all investments during the year," said Arun Natarajan, founder and CEO of Venture Intelligence, which is based in Chennai.

Over 50 percent of the VC investments during 2007 were below $5 million, including 23 percent below the $2 million threshold tracked in the report. According to Sudhir Sethi, founder and chairman of IDG Ventures India, "India is still a good growth story when it comes to VC investment. I believe that early-stage investments which have started are likely to be sustained."

IT and IT services remained the favorites among investors with 65 deals worth about $377 million, Natarajan said.

Sequoia Capital India was again the most active VC investor in India with nine deals during 2007. Among its investments was an outsourcing firm, Pangea3, and Digital Signage Networks. It also invested across a range of sectors including clinical research outsourcing, microfinance and printing services.

Helion Ventures and Erasmic Ventures were also among the top investors, the survey found. Five of Helion's investments during the year went to outsourcing companies like Mindworks Global, an editorial outsourcing firm, Amba Research and Makemytrip.com.

Erasmic invested across both tech and non-tech sectors, including in retail and consumer services companies such as Dovetail Furniture and social networking sites such as Chakpak.com.

NEA-IndoUS Ventures, founded by Pentium developer Vinod Dham invested in four companies, including a travel portal. Dham earlier formed a $130 million fund called New Path Ventures focusing on hardware and chip development.