Venture Capital firms invested $543 million across 98 deals in India during 2007, according to a study by Venture Intelligence in partnership with the US-India Venture Capital Association.
The amount invested during 2007 was slightly higher compared to 2006, which witnessed 94 deals totalling $500 million.
''With early stage investments accounted for about 66 per cent of all investments during the year, the resurgence in seed and first round investments has been a key highlight of 2007,'' said Arun Natarajan, founder and CEO of Venture Intelligence.
Over 50 per cent of the VC investments during 2007 were below $5 million, including 23 per cent below the $2 million threshold, the US-IVCA/Venture Intelligence study showed.
''With strong interest among Limited Partners in both the VC segment as well as India as a destination, the resurgence in early-stage investments is likely to be sustained going forward as well,'' remarked Sudhir Sethi, Director of US-IVCA and founder, chairman and managing director of IDG Ventures India.
With 65 investments worth about $377 million, the information technology and IT-Enabled Services (IT & ITES) industry retained its status as the favourite among VC investors during 2007.
Within IT & ITES, online services companies were the favourite sector accounting for 31 per cent of the investments, followed by BPO, IT Products and Mobile VAS companies. IT & ITES industry was followed by Healthcare & Life Sciences and the Media and Entertainment industry, the study indicated.
Sequoia Capital India retained its status as the most active VC investor in India, with nine investments during 2007. Sequoia ventured beyond IT & ITES to invest across a range of sectors including Clinical Research Outsourcing, Microfinance, Out of Home media and Printing Services.
Helion Ventures and Erasmic Ventures were the next most active investors during 2007 participating in at least eight investments during the year, the survey indicated. Five of Helion's investments during the year went into outsourcing companies providing either IT or BPO services. Erasmic invested across both tech and non-tech sectors including in retail/consumer services companies.
IDG Ventures India followed next with half-a-dozen investments each. Four of early-stage focused IDG Ventures' investments were in the IT Products / Enterprise Software segments including one spin-out from Sasken Communication.
Companies based in South India accounted for 37 per cent of all VC investments (by number of deals) during 2007 compared to almost 57 per cent in the previous year, closely followed by their peers in Western India which accounted for 36 per cent of the pie in 2007.
Among cities, companies headquartered in Bangalore and Bombay were the favourite among VC investors during 2007 with the former attracting 29 investments and the latter 24.
Source: Domain B