Venture capital firms have invested around $762 million over 206 deals in India during the 12 months ended December 2012. While investment activity declined by 7.2% over 2011 (which had witnessed $1,094 million being invested across 222 deals), the amount invested declined by 30% suggesting a marked preference for small ticket investments.
According to a study by Venture Intelligence, with 133 investments worth about $381 million, the Information Technology and IT-Enabled Services (IT & ITES) industry retained its status as the favorite among VC investors during 2012 accounting for 65% of the investments (50% in value terms). The volume of investments in IT & ITES rose by eight% over that in 2011.
The decline in the value of VC investments in IT & ITES investments year-on-year – by 32% - in 2012 is more owing to definition as some of the formerly VC-backed IT start-ups graduated to receive significant sized PE rounds during 2012, commented Arun Natarajan, founder & CEO of Venture Intelligence.
The list of such companies included e-commerce firm Flipkart that raised a $150 million round led by South Africa-based Naspers with participation from Iconiq Capital and existing investors Tiger Global and Accel Partners; local search firm JustDial that raised $60 million from Sequoia Capital India; online advertising firm Pubmatic that raised a $45 million round led by US-based August Capital with participation from existing investors (Helion Ventures, Nexus Ventures, DFJ and SVB) and online classifieds firm Quikr that raised a $32-M round led by Warburg Pincus.),” he added.
Healthcare & Life Sciences industry emerged as the second favorite destination for VC investors, attracting 18 investments worth $98 million during the year. Education industry came in third attracting 14 investments worth $53 million. Financial services and Energy industry were the fourth and fifth favorite industries attracting 10 investments (worth $55 million) and 9 investments ($62 million) respectively.
Investments By Stage & Region
Early Stage investments accounted for 82% of all VC investments in volume terms and 58% in value terms during 2012.
Companies based in South India accounted for 45% of all VC investments (56% by value) during 2012. Their peers in Western India accounted for 25% of the pie in 2012 (12% by value). Companies based in North India accounted for 23% of the investments in 2010 (22% by value).
Among cities, companies headquartered in Bangalore were the favorite among VC investors during 2012 attracting 62 investments, followed by National Capital Region (including New Delhi, Gurgaon and Noida) based companies that accounted for 45 investments and Mumbai based companies with 39 investments. Chennai and Hyderabad followed with 14 deals and 12 deals.