Venture Capital (VC) investment in Indian companies slumped 43 per cent to $475 million (around Rs 2,200 cr) in 2009, but analysts hope that the fund raising would pick up in the coming months.
VC firms invested $475 million over 92 deals in India in 2009, the data compiled by research firm Venture Intelligence in association with Global-India Venture Capital Association (GIVCA) showed.
VC funds had invested $836 million across 153 deals in 2008.
"Liquidity position of the limited partners is improving and this will bring back the pace of VC investment in 2010. We have already seen an improvement in December quarter funding and it is expected to increase further going ahead," Venture Intelligence Chief Executive Arun Natarajan said.
A VC firm invests in a start-up business that is perceived to have excellent growth prospects but does not have access to capital markets.
During the fourth quarter of 2009, VC funds have made 42 investments worth $265 million - higher than that during the same period in 2008. The figure was more than double of the 23 investments worth $102 million made during Q4 2008.
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"The strong recovery in investment activity in the last quarter of 2009 as well as the rising interest among global investors towards emerging markets like India is quite encouraging for the growth of the sector," GIVCA Chairman and Managing Director of IDG Ventures India said.
Further, with the improvement in the secondary market and VC funds now exiting the companies with ease, there could be an increase in the number of funds on the road.
"Year-on-year figures are likely to improve in the March quarter. More funds would come in going ahead as follow-on investments would rise," Natarajan said.
The HSBC PE, IFC and Intel Capital together investing $20 million in Financial Information Network and Operations (FINO) was among the largest investments reported in 2009, the data showed.
Information technology and IT-enabled services companies accounted for about 43 per cent of the total investments made in 2009, followed by the financial services industry and healthcare & lifesciences.