Venture firms making a difference in India

Venture capital firms are pumping more money into Indian companies, and a new study confirms those companies are growing faster than other companies.

Meanwhile, Silicon Valley’s Mayfield Fund becomes the latest firm to start investing there, announcing today it has joined a $20 million round of investment in Tejas Networks, an Indian optical networking company (see our earlier mention of Tejas), and is backing the Seedfund, an Indian firm that makes investments very early stage companies.

Venture and other investment firms pumped a record $7,460 million in over 299 India companies last year, more than three times the previous year.

That these Indian companies are growing more quickly than other Indian companies isn’t a surprise; you’d expect this after they take cash from an outside investor. But a new study from India’s Venture Intelligence (sorry, subscription required, so no direct link to study itself) confirms this, and suggests the venture capital model pioneered in Silicon Valley is taking root nicely there:

The study looks at Indian companies taking money from so-called “private equity” firms, which includes firms that give venture capital to early companies, but also those that give money to more mature companies. It found the following:

Sales at publicly-listed PE-backed companies grew at 22.9% over the five year period between 2000 and 2005, compared to 10% at non PE-backed listed firms and 15.8% at Nifty Index companies.

Wages at publicly-listed PE-backed companies grew at 32% over the five year period between 2000 and 2005, compared to 6% at non PE-backed listed firms and 16% at Nifty Index companies.

Also today, Norwest Venture Partners, another Silicon Valley firm, said it has led an $20 million investment in Mumbai’s Adventity (see our story).

Some of the Indian investments comes from internal sources, but much of it derives from Silicon Valley and other U.S. firms.

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