Venture Capital: Destination India
17 April 2007
Silicon Valley-based VC firms are taking the lead to enter India, a market that offers the best of the three key location-based advantages. At last count, 44 US-based VCs had announced plans to set up India-based funds of an average fund size of $100 million, says Bundeep Singh Rangar, chairman of the UK-based India-focused cross-border advisory firm, IndusView.
Few
things excite venture capitalists more than the possibility
of investing at a low price in a company with global
disruptive potential that offer an exponential return.
Internet start-ups offer among the best potential for
high-growth, capital efficient and exit-able investments.
As India''s internet user base of 50 million grows at
25 per cent each year, more internet companies are being
formed to target the online market. Consequently, more
funds are being set up to invest in such companies.
Not surprisingly, Silicon Valley based VC firms are taking the lead. At last count, 44 US-based VCs had announced plans to set up India-based funds of an average fund size of $100 million. If successful, that would imply about $4.4 billion in new investment capital would be available for venture investments in India over the next five to six years. That''s more than twice the $2.03 billion total in venture capital and private equity investments in India in 2005 and comparable to the investments in 2006 at $7.8 billion.
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