Tech firms back on VCs' radar

Once bitten, twice shy; so goes the adage. But, even after seeing its investments in dotcoms and other tech-related start-ups go bust in the late 1990s, venture funds are again willing to bet their money on technology-powered businesses in India.

But unlike last time, they are backing only those firms, which have a visible revenue model, strong client base and in companies in the consumer-powered Internet, mobile and business process outsourcing space.

Some recent venture investments in technology include $2.2 million in JiGrahak Mobility Solutions, a Bangalore-based mobile technology company that enables mobile commerce and payments through products, $5 million by Clearstone Venture Advisors in online payment service provider Billdesk, $5 million in mobile-based payment provider Paymate by Sherpalo Ventures and Kleiner Perkins Caufield and Byers and $10 million in Web 2.0 pioneer Sulekha.com by Norwest Venture Partners among others.

"Compared to the tech bubble period, venture funds are now investing in businesses that have a sound customer base," said Arun Natarajan, CEO of Venture Intelligence.

He said most of the action is taking place in consumer internet and mobile telephony space.

"The key difference is that mobiles, as an access device, was non-existent in late 1990s," Natarajan said.

"There could be one or two irrational investments going forward, but this is only natural considering that more venture funds are looking for investments in India," he opined.