Venture capital firms invested USD475m over 92 deals in India during the 12 months ending December 2009, according to a study by Venture Intelligence in partnership with the Global-India Venture Capital Association.
The amount invested during 2009 was lower compared to 2008 which had witnessed USD836m being invested across 153 deals.
VC firms began to increase their pace of investments in Q4 2009, making 42 investments worth USD265m – significantly higher than that during the same period in 2008 (23 investments worth USD102m) as well as Q3 2009 (19 deals worth USD74m).
“The strong recovery in investment activity in the last quarter of 2009 as well the rising interest among global investors towards emerging markets like India is quite encouraging for the growth of the sector,” says Sudhir Sethi, director of GIVCA and founder, chairman & managing director of IDG Ventures India. “During 2010, we expect significant follow-on investments into companies that raised series A rounds in the past two to three years as well as a rise in exit activity as the global economic recovery gathers pace.”
While the information technology and IT-enabled services industry retained its status as the favourite among VC investors during 2009, the industry’s share has declined to about 43 per cent from about 55 per cent during 2008.
Other industries that attracted significant investor attention during the period included financial services (led by microfinance deals), healthcare and life sciences, and alternative energy.
Within IT & ITES, online services companies retained their status as the favourite sector accounting for about 39 per cent of the investments during 2009.
Companies based in South India accounted for 50 per cent of all VC investments (47 per cent by value) during 2009. Their peers in Western India accounted for 25 per cent of the pie in 2009 (29 per cent by value). Companies based in North India accounted for 15 per cent of the investments in 2009 (12 per cent by value).
Among cities, companies headquartered in Bangalore and Mumbai were the favourite among VC investors during 2009 with the former attracting 29 investments and the latter 15. The Delhi National Capital Region (including New Delhi, Gurgaon and Noida) accounted for 11 investments followed by Hyderabad with nine.