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US VC to invest $200 million in India news
08 March 2007

New Delhi: US-based VC fund New Enterprise Associates (NEA) has lined up $200 million for investing in India. NEA is currently looking at various technology related areas and might finalise some of its investments in the next few weeks, says Ben Mathias, NEA's vice president, India.

Mathias said that telecom, media and KPO (knowledge process outsourcing) were three areas that NEA significant interest in. "We plan to invest $ 200 million fund mostly in IT-related Indian companies over the next two - three years," he said, adding that in the future NEA would also look at non-IT companies.

He also said that NEA was also bullish on energy and had in fact looked at the sector for its $200-million initial investment plans, nothing of interest had emerged. He said NEA was planning a separate pool to invest in healthcare companies.

Interestingly, none of these areas qualify for tax benefits for venture capital firms, as the finance minister has proposed in this year's Budget restricting tax benefits to specific set of sectors like nanotechnology and seed research. The usually favoured areas for VC investments such as offshoring services (BPOs / KPOs), telecom, media and entertainment and retail do not qualify for tax benefits.

Of the $6.5-7 billion in venture capital investments in India last year over 50 per cent went to IT and telecom sectors.

NEA has made six investments in India so far, which include Bangalore-based Sasken, a software R&D firm in Noida and WiMax firm Telsima.

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US VC to invest $200 million in India