The Mercury News is running a notable series about the return to India by Silicon Valley entrepreneurs as venture capitalists. It gives you a taste of the “India rising” excitement, but also of the country’s daunting cultural, social and infrastructure challenges.

india-kola.bmpIt features Vani Kola, who returned this summer to begin investing a new fund into Indian start-ups, NEA IndoUS Ventures (size targeted initially at $105 million), which we mentioned earlier here. It also features Rahul Khanna, pictured below, director of Clearstone Venture Advisors, who returned last year to invest a $205 million India fund, and Bob Kondamoori, pictured bottom, who is reportedly launching a $100 million India fund, Sandalwood Partners.

The key stat: VCs have invested $355 million during the first nine months of 2006, nearly twice as much as the two previous years combined.

india-khanna.bmpThe story says dozens of funds — “anywhere from 24 to 44, depending on who’s counting” — are being created to focus on the India market, but gives no source for this. It also cites Kola saying that Indian laws “favor the founders, not the investors,” but gives no explanation. We’ve contacted author John Boudreau to clarify. (Meanwhile, if any of you have any insights on this, we’d like to hear from you in comments below).

There are a few more stories in the series to come; we’ll update this post as necessary.

india-Kondamoori.bmpMeanwhile, there’s a good set of slideshows here, though you’ll have to play with tabs a bit to get to it all. It’s a nice presentation of the voices of the VCs as they talk about their experiences.

There’s a good list of some of the U.S firms that have entered China so far, with more details here:
• CANAAN PARTNERS
• CLEARSTONE VENTURE ADVISORS
• DRAPER FISHER JURVETSON
• KLEINER, PERKINS, CAUFIELD & BYERS
• MATRIX PARTNERS
• SEQUOIA CAPITAL

Separate from this series, we’re not sure how accurate this reference to a recent poll result is, i.e., that Bill Gates displaced Mahatma Gandhi as the most respected person among Indians, but it is notable that the question is even being asked.

The most recent investment came Friday, when Matrix Partners India announced an investment of $5.4 million into Yo! China, India’s largest Chinese fast-food chain. We’ve mentioned Matrix India’s $150 million fund here.

(Photos all courtesy of Meri Simon, Mercury News)