China has certainly been the belle of the ball among venture capitalists. Investors have already put nearly $2.6 billion to work in China year-to-date. That’s 50% more than what VCs invested during the first eight months of 2007, according to Thomson Reuters (publisher of PEHub.com).
However, a spate of recent fund closings suggests venture firms are anxious to up their efforts in the Indian subcontinent. Venture investors are doing their part to spur economic development in India. VCs have invested more than $2.3 billion into the country so far this year.
Among the more noteworthy firms that are active is Sequoia Capital, which announced early this month that it raised $725 million for its second Indian growth fund, a scant two years after raising a $400 million growth fund targeting the country.
Accel Partners announced last month that it has rolled Indian seed investor Erasmic Venture Fund into a new fund. The newly minted India operation, called Accel India Venture Fund, is working to raise $60 million by the end of the year.
USA!! Also, early stage investor Nexus India Capital closed $220 million for its second fund in August, just two years after closing its $100 million inaugural fund. Meanwhile, balanced stage venture firm Helion Venture Partners closed $210 million for its second fund in March, also just two years after its inaugural fund.
“The domestic market is still very much booming,” says Deepak Kamra, general partner of Canaan Partners, who visited India earlier this month. “The country has a lot of catching up to do to get up to the rest of the world. I haven’t seen any slow down in terms of venture firms’ activity.”
Canaan has increased its commitments in India and recently hired Executive Director Harish Gandhi to look at deals in New Delhi.
And for each firm that’s reloading, there seems to be another that’s raising its first fund. Growth stage private equity and buyout firm Gaja Capital Partners is targeting $200 million for its first fund and recently closed $144 million of that, according to Thomson Reuters. Longtime angel investor Kanwal Rekhi is fund-raising for a new firm called Inventus Capital Partners and has raised $50 million toward the $125 million target that he hopes to reach before next year.
Still, Kamra doesn’t expect to see too many more firms announcing India operations.
“I don’t see as many new firms there, not as much as I saw in 2007,” Kamra says. “Most of the major firms are there now. Many are doing late stage only, but some are doing early stage too. Anybody who wanted to have a play is pretty much there.”