India

VCs make 206 investments worth USD762m in India in 2012

Venture capital firms invested about USD762m over 206 deals in India during the 12 months ended December 2012, according to a study by Venture Intelligence.

While investment activity declined by 7.2 per cent over 2011 (which had witnessed USD1,094m being invested across 222 deals), the amount invested declined by 30 per cent suggesting a marked preference for smaller ticket investments.

With 133 investments worth about USD381m, the IT and IT-enabled services (IT & ITES) industry retained its status as the favorite among VC investors during 2012 accounting for 65 per cent of the investments (50 per cent in value terms). The volume of investments in IT & ITES climbed eight per cent over that in 2011.

“The decline in the value of VC investments in IT & ITES investments year-on-year – by 32 per cent - in 2012 is more owing to definition as some of the formerly VC-backed IT start-ups graduated to receive significant sized PE rounds during 2012,” says Arun Natarajan, founder and chief executive of Venture Intelligence. “The  list of such companies included e-commerce firm Flipkart that raised a USD150m round led by South Africa-based Naspers with participation from Iconiq Capital and existing investors Tiger Global and Accel Partners; local search firm JustDial that raised USD60m from Sequoia Capital India; online advertising firm Pubmatic that raised a USD45m round led by US-based August Capital with participation from existing investors (Helion Ventures, Nexus Ventures, DFJ and SVB) and online classifieds firm Quikr that raised a USD32m round led by Warburg Pincus).”

Healthcare and life sciences industry emerged as the second favourite destination for VC investors, attracting 18 investments worth USD98m during the year. Education industry came in third attracting 14 investments worth USD53m. Financial services and energy industry were the fourth and fifth favourite industries attracting 10 investments (worth USD55m) and nine investments (USD62m) respectively.

Early stage investments accounted for 82 per cent of all VC investments in volume terms and 58 per cent in value terms during 2012.

Companies based in South India accounted for 45 per cent of all VC investments (56 per cent by value) during 2012. Their peers in Western India accounted for 25 per cent of the pie in 2012 (12 per cent by value). Companies based in North India accounted for 23 per cent of the investments in 2010 (22 per cent by value).

Among cities, companies headquartered in Bangalore were the favorite among VC investors during 2012 attracting 62 investments, followed by National Capital Region (including New Delhi, Gurgaon and Noida) based companies that accounted for 45 investments and Mumbai based companies with 39 investments. Chennai and Hyderabad followed with 14 deals and 12 deals respectively.

Blume Ventures was the most active VC investor during 2012 with 23 investments. Twelve of Blume’s investments went into Online Services companies, four into Enterprise Software companies, two each into Mobile Gaming and Communication Tech one each into Retail Consulting, Healthcare and Mobile VAS.

Blume was followed by Accel India and Sequoia Capital India with 12 investments each. While Accel India made 10 new investments, Sequoia made eight new investments. Nexus Ventures and IDG Ventures India came in next with nine investments each. Nexus and IDG made six and four new investments respectively. Kalaari Capital (formerly IndoUS Ventures) made eight investments while Helion Ventures and Inventus Capital Partners made seven investments each in India-based companies.

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