IDG Ventures to invest in renewable energy sector

IDG Ventures India, which manages a fund of $150 million with interests in technology companies, is now looking at renewable energy and payment solutions as major areas of opportunity.

The company which started investing in Indian technology start-ups in early 2007, is expecting to close deals in the range of $1-5 million in both these categories.

"Renewable energy consumption in emerging economies like India is set to grow to a much bigger scale due to a shortfall in energy requirements. We believe that many a company will start investing on technologies to address the shortfall, and this will become an interesting area for us to invest," said Sudhir Sethi, Founder, Chairman & Managing Director, IDG Ventures India.

He said the company was in talks with a few prospective candidates and was expecting to close a deal soon.

According to a report by Ernst & Young, India has become the third most attractive market in the world for renewable energy, owing to national and regional government support for both foreign and local investment in renewable technologies. The renewable energy policy of the Centre aims at generating 10,000 Mw through renewable and a non-conventional source by 2012. Globally, India ranks 5th in terms of exploitable hydro-potential and 4th in wind power generation. According to Sethi, IDG Ventures was looking at primarily companies who are into solar energy space, since wind energy was more capital intensive.

IDG is also looking at investing in companies in the Internet and mobile payment solutions space.

"Many interesting start-ups have come up in the mobile payment space during the last one year. While some of them have already enjoyed the first round of funding, some are looking at the next round. We have seen about 7-8 companies both in Internet and mobile payment space, and can invest upto $5 million," said T C Meenakshisundaram, Managing Director, IDG Ventures India.

He said the mobile payment space has become lucrative with GPRS technology now becoming available to the common man.

"Our estimate is 40 per cent of the mobile phones in India are GPRS-enabled, and of that about 20 per cent of the users use GPRS more effectively."

Recently, IDG Ventures has invested $3 million in Perfint, a healthcare start-up that manufactures diagnostics equipment. Of the six companies IDG has so far invested in India, five are in product space.

"Our strategy will be investing more in product companies. We believe that more and more start-ups will be product companies," said Ranjith Menon, Investment Advisor, IDG Ventures India.