Movers & Shakers: Investment - Putting Money Where the Growth is

Besides venture funds, many organizations and government-led
incubation facilities are also encouraging start-up culture to thrive. Another
trend that raised the hopes of dotcom start-ups, is the rising investor interest
in Internet-based businesses.

An EvalueServe report on VC investment in India estimates that
as much as $4.4 bn will flow into India via VC funds over the next one year.
Seven new funds were launched recently and over 44 US-based VC firms are now
seeking to invest heavily in start-ups and early-stage companies in India.

The newly minted Helion Venture Partners announced a $140 mn
multistage fund, which would be completely focused on India. The fund will
provide capital and mentoring to "technology-powered" businesses in
India.

Intel Capital India was on an overdrive funding a clutch of
companies such as Ilantus, Mobiapps, Tejas Networks and Vignani Technologies.
The fund has a portfolio of $250 mn.

Sequioa Capital that has backed many successful Silicon Valley
companies such as Google and Cisco Systems also put its greenbacks into
companies based in India and China.

Dotcom companies also caught the attention of VCs this year. The
successful makemytrip.com travel portal received $15 mn, while community site
sulekha.com got $10 mn and Indian search start-up Guruji.com landed $7 mn in its
kitty.

Seedfund that is backed by Motorola Ventures, Reliance Capital,
Edelwiess, Silicon Valley Bank, Sierra Ventures, and Silicon Valley-based
entrepreneurs, launched a $10 mn to $15 mn fund for early-stage capital to
startups in November 2007.

Not to be left behind, industry entrepreneurial body, The Indus
Entrepreneurs (TiE) started a unique program this year to provide angel funding
to Indian start-ups. Four Bangalore-based start-up companies, Redbus, PicSquare,
Salesguru and Experience Commerce, received angel funding and support in terms
of incubation space, legal help for processing patents and manpower search.

Private equity (PE) activity picked up this year as well, with
IT and ITeS taking the lion's share of the investment. The biggest private
equity buyout in the IT services sector happened this year when Flextronics
decided to sell 85% of its stake in Flextronics Software Systems and Frog Design
to Kohlberg Kravis Roberts and Co for $900 mn. Flextronics retains 15% equity
stake in the business.

Most PE investors, however, preferred late-stage and
growth-stage investments.

Priya Padmanabhan,
CyberMedia News

maildqindia@cybermedia.co.in