VC FUNDS: Plenty, for Good Ideas

PM’s Rs 100 crore fund for IT industry

Prime minister Atal Behari Vajpayee launched the National Venture Fund for

Software and IT Industry (NFSIT). The initial amount of Rs 100 crore has been

set up by the Small Industries Development Bank of India (SIDBI) and the

ministry of information technology (MIT). It has already received 38 proposals

with venture capital of Rs 136 crore, as against the created corpus of Rs 100

crore.

NFSIT aims to meet the total fund requirements of the software and IT

companies, and to help small exterprises achieve rapid growth rates and maintain

a competitive edge. The fund will develop international networking and enable

assisted units to attract co-investment from international VCs in subsequent

rounds of financing. The initial contributors to the NFSIT are SIDBI, MIT and

the IDBI.

Citibank to invest $50 mn in IT companies

Citibank Private Equity Fund will invest around $50 million in infotech

companies during the next one year. Among the companies that it has invested in

Rediff has gone public, while DCM Tech, Dishnet and NewGen will do so soon. The

fund plans to invest in a Times of India group venture, Timesofmoney.com. The

Citibank Group would invest around Rs 30 crore in the new venture, of which Rs

10 crore would be invested by the IT wing of the Citibank Group, Citil.

Sidbi’s $50 mn fund for Silicon Valley start-ups

Small Industries Development Bank of India (Sidbi) will launch a $50-million

international VC fund for financing new entrepreneurs in the Silicon Valley. The

scheme for financing overseas IT ventures is close to Sidbi’s Rs 100-crore

national VC fund. SIDBI would also launch a fund for Delhi to develop it as a

hub for IT industry. The international fund would target software and services

companies focusing on upcoming technologies. These would include companies with

Internet and e-commerce portfolio.

ICICI’s Global Opportunity Fund

ICICI Venture Funds Management Company’s Global Opportunity Fund with a

corpus of around $150 million to $175 million will incubate ideas and

initiatives both in the US and India. The fund targets companies in e-commerce,

Internet and telecom software, and IT-enabled services and products. ICICI

Venture Funds Management has also set up an ICICI IT fund of Rs 1 billion, which

has fully invested in companies needing less than Rs 1 million funding.

Feedback’s Internet initiative

Feedback Ventures, an investment and consulting company, made a foray into

the Internet space by launching Feedback E-Space with an initial investment of

$10 million. The mandate of the new company includes helping start-ups to list

their stocks in Indian and overseas markets and helping them go through the

process of mergers and acquisitions. The equity stakes in these companies would

be between 15% and 30%. E-Space would have Feedback Ventures holding 35% and

employees holding 15%. The rest will be raised from individuals and corporate

investors in India and abroad. Feedback is in the process of establishing an

Internet exchange for the trucking industry, which is valued at Rs 50,000 crore.

The company is also developing exchanges for the textile and the healthcare

segments besides planning services for e-trading, e-retailing and Internet

services.

Insight Capital’s Asia IT fund

US-based Insight Capital Partners launched an Asia fund jointly with

Microsoft, i2 Technologies and an investment firm representing Michael Dell,

chairman, Dell Computer. The private equity fund, called ConnectCapital, will

incubate IT and remote service businesses for a global market.

The size of the fund would total between $250 and $400 million over a two to

three year period.