Canaan set to expand in India

Gears up for $650 mn global fund.

Canaan Partners, the two-decade old, US-based early stage venture capital firm with $2.5 billion under management is planning to raise its eighth fund, targeting a corpus of $650 million. The seventh fund from which the VC is presently investing is $450 million.

The company, which styles itself as venture catalysts, has been increasing its exposure in India and has so far understood to have committed close to $50 million in four companies during the past year and half, including investment in BharatMatrimony.com and techtribe.com

Canaan India head Alok Mittal confirmed that Canaan is in the process of a new fund of around $650 million and added that the India team is being expanded to handle the hike in the deal flows.

"We do not have a target of how much we will have to invest in India, but we are certainly looking for more opportunities," Mittal added.

The move by Canaan to raise its next round comes close on the heels of venture firms like Matrix India Partners, Sandalwood Capital and Sequoia, all raising early stage funds in the range of $300 million - $500 million with significant interest in India.

According to industry research, $500 million is expected to be invested in India across 90 early-stage companies by VCs during 2007.

Mittal further added that the existing 30-odd limited partners in the seventh fund such as U C Berkeley are expected to come in again as LPs for the next fund.

Canaan is also among the early investors in Bangalore-based e4e Labs started by ex-Wiproite Sridhar Mitta.