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.

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