Venture capitalists have long hoped to curry favor with Indian entrepreneurs.
VCs flocked to India in droves during 2005 and 2006, but exits have been few and far between in the country as the global economic slowdown has hit venture investors in India particularly hard.
It should then come as no surprise that VCs invested only $77 million in 17 deals in India during the third quarter, down significantly from the $298 million that VCs invested in 55 deals during the same quarter a year ago, according to a recent survey by
Information technology and financial services companies accounted for 70% of all deals, according to Venture Intelligence.
Even successful firms with a deep involvement in India have slowed their pace. Consider
Kleiner Perkins and Sequoia combined invested in 20 startups that raised a total of $252 million in 2008, according to data from Thomson Reuters (publisher of PE Week). So far this year, the two firms have only invested in six startups that raised a total of $47 million.
Other marquee firms have either dramatically decreased their involvement in the country or pulled out all together.
Other firms, such as
Other firms are doubling down on their India investments.
Moves like Accel’s give industry watchers hope that the market for early stage finance will rebound in India. And as dismal as third quarter investment totals were, they were actually slightly better than second quarter venture commitments, when VCs put only $54 million to work during the three-month period.
“We expect the investing momentum to pick up even further,” says Sudhir Sethi, a managing director of