Sizzling Venture Capital Market in India

As per a report by Evalueserve the Venture Capital market in India, which picked up some time in 2004  is now sizzling as VC Firms in India and overseas are flocking to setup Venture Funds to invest in Indian startups.

Over 44 US-based VC firms are now seeking to invest heavily in start-ups and early-stage companies in India. These firms have raised, or are in the process of raising, an average of US $100 million each. Indeed, if these 40-plus firms are successful in raising money, they would garner approximately $4.4 billion to be invested during the next 4 to 5 years.

However, VCs have been exclusively focusing on only a few sectors like IT, Telecom, BPO and Consumer Internet, the report cautions that that would mean a lot of money and too few companies. The report evaluates that a typical start-up in India would require $9 million during the first three years (i.e., $3 million per year) and even assuming that the start-up survives for three years, investing $2.2 billion during 2007-2010 would imply investing in 150 to 180 start-ups every year during this period, which simply does not seem practical if the VCs continue to focus only on their current favourite sectors.

Comprehensive listing of various Venture Capital firms and their focus areas have been listed in the report, that would definitely give an excellent overview of the market for the readers.Access the free report from Evaluserve here.


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