Venture capitalists invested $928 million in 80 India-based companies last year, a significant 166% jump compared to 2006

Here’s a spreadsheet (downloads Excel file) with historical data.

Here’s the press release from Dow Jones, which published the data:

Bangalore, Mumbai and New Delhi (21 February 2008)—Venture capitalists invested some $928 million in 80 deals for entrepreneurial companies in India during 2007, according to the Quarterly India Venture Capital Report published today by Dow Jones VentureSource. This was a whopping 166% increase over the $349 million invested in 36 deals in 2006 and easily the highest total on record for the region.

The report found nearly 48% of all venture financing deals in India were for Information Technology (IT) companies, as 38 rounds were completed, accounting for $384 million, more than India’s entire 2006 venture investment total. The most popular recipients of venture capital in the IT industry were companies in the Web-heavy “information services” sector, which accounted for 22 deals and nearly $141 million in investment. Among the deals in this area was the $10 million second round for Bangalore-based Four Interactive, an online provider of local information on food, events, lifestyle, shopping and more.

“Service-oriented companies in India—both in the technology fields and the non-technology areas of hotels, taxis and similar services—continue to attract investment and this is likely due to their low capital requirements as well as to the rapidly emerging nature of the broader Indian economy,” said Jessica Canning, Director of Global Research for Dow Jones VentureSource, “It takes relatively little money and little time for these kinds of companies to begin generating revenues and, because of this, Web-related and consumer and business services companies accounted for more than half of all the venture capital deals done in India in 2007.”

According to the data, the overall business/consumer/retail industry saw 30 deals completed in 2007 and more than $346 million invested, a 92% jump over the $180 million invested in 16 deals in the industry in 2006. As said, the business/consumer service area accounted for the bulk of the interest in this industry, with 22 deals and $254 million invested.

India’s health care industry, while still in its infancy, also saw increased investor interest in 2007 with seven completed deals and nearly $100 million invested, more than double the $41 million invested in the prior year.

“This is only the beginning for the venture capital market in India,” said Ms. Canning. “In 2007, 79% of all deals in India were for seed and first rounds and a lot of these companies will continue raising venture capital as they progress toward profitability and liquidity. And because the majority of investment is going to early-stage companies, we aren’t seeing ballooning deal sizes like those in the U.S and Europe where investors are focused more on later-stage companies.”

In fact, the median size of a venture capital round for companies India was $9 million in 2007, up slightly from $8.7 million in 2006 but well below the $18.8 million median seen in 2005. Of all the companies in India that received venture funding in 2007, nearly 73% were already generating revenues or profitable.

The Quarterly India Venture Capital Report covers venture capital investment specifically, which Dow Jones VentureSource defines as growth capital made available to entrepreneurial companies in exchange for ownership in the form of private securities. These investments are often seen as shorter-term and do not include private equity investments such as leveraged buyouts or mezzanine and debt financing.


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