After gloom, VCs are back with money bags
Good news for daring entrepreneurs in the country, who aim to create an identity in the global technology horizon.
Venture capitalist (VC) firms are back for investing in Indian technology firms. Major IT & technology VCs like IDG Ventures, Helion Advisors, Intel Capital among others see huge opportunity in India post recession.
During recessionary period India saw sporadic growth in numbers of start-ups, as many corporate offered pink slips to employees. However, employees who started their own business were witnessing major challenge of raising funds to expand their portfolios. The situation is slowly changing as major India focused VCs have now allocated large funds for investment. The VC arm of Intel, for example, has a $250 million corpus, similarly Helion and IDG has allocated $350 million and $150 million for investments.
According to Helion Venture Partners Managing Director Kanwaljit Singh, the start up ecosystem remained healthy during the economic slow down last year. On the contrary, investor interest was low and most start ups had to raise money exclusively from angels, friends and family. The most appealing factor which attracts VC funding, is that India is considered as fastest growing countries among the BRIC (Brazil, Russia, India and China) and also offers huge potential market for technology. Apart from this India which was considered as traditional low cost IT services destination is slowly transforming into product manufacturer and entering other high-end engineering process.
“Earlier India was considered as low cost outsourcing destination, now the scenario is changing and start-ups are looking at developing products specially in mobile technology, Internet, value-added services, education, Wi-max. We have invested around $90 million within 3 years, now we see more opportunity in Indian market” said Intel Capital India, Japan, Australasia & South East Asia Managing Director Sudheer Kuppam.
Board positions
Most VC funds help companies not only to raise money but also give an opportunity to reach out to global market easily. Funding firms also takes board positions in invested companies, which provide them easy access to industry experts in getting advise in critical areas. VCs also see South India and Karnataka as major hub of investment region.“We see Bangalore and rest of South India as most prolific entrepreneurship region for tech startups. However Mumbai, Delhi, Hyderabad and Chennai also share a major portion of the pie,” said IDG Ventures India Vice-President Ranjith Menon. His company is planning to invest in 11 companies within two years.
