The Hindu Business Line : Venture capital to India slides 72% in first half

Chennai, July 17 Venture capital investment in India has dropped nearly 72 per cent to $117 million over 27 deals during the six months ending June 2009 compared with $413 million investment in 67 deals in the first half of last year, according to a study by Venture Intelligence in partnership with the Global-India Venture Capital Association.

With 14 investments worth about $75 million, the information technology and IT-enabled Services (IT & ITES) companies accounted for 52 per cent of the deals (63 per cent in value terms) in first half of this year. Within IT & ITES, online services companies retained their status as the favourite sector — accounting for over 57 per cent of the investments (by volume) within the industry during the first half.

Signs of revival

“While the uncertainty in global financial markets over the last six months has (been) affecting venture capital investing in India as well, there are clear signs of revival over the last couple of months — especially in emerging markets like India,” said Mr Sudhir Sethi, Director of GIVCA and Founder, Chairman and Managing Director of IDG Ventures India.

Domestic demand driven sectors such as financial services (especially microfinance), healthcare and education are the other industries that continue to attract venture capital attention. Early-stage deals (first /second round of venture capital investments into companies that are less than five years old) accounted for two-thirds of the venture capital investments (and 57 per cent in value terms) in first half of this year, the study shows.

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