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Overview of Venture Capital Investments in India, 2012-14: Will More Venture Capitalists Invest in 2014?

VC blog 3-1

The Venture Capitalists are active once again in India.  After a brief lull in the recent past, there are indications of higher investment activities in the coming days.  The VC market witnessed a decrease in investment in the year 2012 compared to the previous year.   It was reported that there was 7.2% decline in investment in 2012 compared to the previous year.  Details of the investment of venture capital firms in India are as follows,

 

2012

2011

Total investment

$762 million

$1,094 million

Number of deals

206

222

The following table gives the details of investments in IT & ITES industry which remained at the top spot in 2012.

 

2012

2011

Value of investment

$381 million

$ 561 million

Number of deals

133

123

Other than IT & ITES industry, VCs put their money in more industries in the year 2012 as given below,

Industry

Value of Investment

Number of Deals

Healthcare & Life Sciences

$98 million

18

Education

$53 million

14

Financial Services

$55 million

10

Energy

$62 million

9

A few of the investments of the year 2012 are as follows:

  • Flipkart raised $150 million from South Africa-based Naspers with participation from Iconiq Capital, and existing investors Tiger Global and Accel Partners.
  • Local search firm JustDial raised $60 million from Sequoia Capital India.
  • Online advertising firm Pubmatic raised about $45 million from US-based August Capital with participation from existing investors (Helion Ventures, Nexus Ventures, DFJ and SVB).
  • Online classifieds firm Quikr raised around $32 million from Warburg Pincus.
  • Tens startups in the domain of Software-as-a-Service or SaaS was identified by the trade pundits in 2012, and received venture capital funding from Capillary, Exotel, Freshdesk, Nevales, Practo, WebEngage, Wingify, Reach Accountant, Mettl, and Zipdial.

Venture Capital Investments in India, 2013

The year 2013 witnessed the successful exit of four VC investments – Just Dial, Red Bus, Global Logic and Prizm.  Around $2 billion of market value was released in 2013 with the exit of these companies.  Further, 2013 witnessed the emergence of technology ventures and product innovation companies that continued to receive VC funding.  E-commerce startups and Mobile Application Startups continued to receive funding in 2013.  Real estate has witnessed a huge influx of venture capital in 2013.  In fact, of all the sectors, real estate is the highest receiver of venture capital funds, followed by telecom. Some of the favorable factors were the change in policies of foreign direct investment, relaxation of FDI limits in some segments and rationalization of GAAR.  Further the preferential clauses for investors in IPO were another factor which favored further VC activities

Venture Capital Investments in India, 2014

There exists an air of optimism in the market with regards to venture capital in the current year, 2014.  The year 2014 should see an upsurge in the use of mobile applications, especially electronic payments and micropayments.  This could lead India in becoming a global leader in this space.  The emerging investment themes represent significant broadening of technology venture activity, beyond the classic services and internet spaces.  2014 is expected to encourage a volley of entrepreneurs setting up shop.  Favorable policies will also encourage investors to support the entrepreneurs and be focused on realizing returns as investments mature.  2014 is expected to be a better year in terms of fund deployment as well.

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