VCs favour advertising start-ups in India: DowJones report

23 August 2008

Mumbai: Venture capitalists were eager to back advertising start-ups in India during the second quarter of 2008, according to the Quarterly India Venture Capital Report released today by Dow Jones VentureSource.

The report found that $89 million, almost 37 per cent of the region's quarterly investment total, went to five advertising and marketing companies, more than any other sector.

Overall, India attracted $238 million in venture capital investment, with 17 deals closed in the second quarter, marking a 120 per cent increase over the $108 million invested in 12 deals during the same period in 2007.

"We've seen deal activity in India hold steady for three consecutive quarters but this most recent quarter posted the second-highest investment total on record, due in large part to the $70 million second round for Laqshya Media of Mumbai, the second-largest deal ever completed in India," said Jessica Canning, director of global research for Dow Jones VentureSource.

"This highlights two growing trends within the region -- one being a growing interest in advertising plays that capitalize on India's emerging infrastructure and growing Internet usage; the other being an increase in second-round deals, which is expected as VCs are helping their portfolio companies expand and steering them toward liquidity,'' said Canning.

The research data showed that India saw seven second-round deals completed in the second quarter, garnering a record $161 million and exceeding the $118 million that was invested in second rounds in all of 2007.