Venture Capital Investment in India Skyrockets in First Nine Months of 2007,
Reaching $777 Million
First India Venture Capital Report from Dow Jones VentureOne and Ernst & Young
Finds VCs Invested Five Times More Capital in First Three Quarters of the
Year; Service oriented deals in IT and Cons/Bus sector seen as a Favorite in
that order
BANGALORE, MUMBAI and NEW DELHI, India, Dec. 3 /PRNewswire/ -- Venture
capitalists invested more than $777 million in 57 deals for entrepreneurial
companies in India during the first three quarters of 2007, according to the
Quarterly India Venture Capital Report published for the first time today by
Dow Jones VentureOne and Ernst & Young. This was nearly five times the $158
million invested during the first nine months of 2006 and more than twice the
annual investment record of $320 million set in 2005.
    The report covers venture capital investment specifically, which Dow Jones
VentureOne defines as growth capital made available to entrepreneurial
companies in exchange for ownership in the form of private securities.  These
investments are often seen as shorter-term and do not include private equity
investments such as leveraged buyouts or mezzanine and debt financing.
    The report showed 54% of all venture deals in India were for companies in
the Information Technology (IT) categories, as 31 rounds were completed in the
first nine months of the year, accounting for more than $327 million worth of
investment.
    "Though the majority of financing rounds in the first nine months of 2007
were struck in the IT industry, the Business/Consumer/Retail industry
attracted the most venture capital with $376 million invested during this
period.  The median amount invested in a Business/Consumer/Retail round of
financing reached $12 million, double the median round size in IT.  This
reflects a significant trend reversal compared to 2006, when both industries
showed a similar median amount invested of approximately $9 million," said
Dilip Dusija, Ernst & Young's, Venture Capital Advisory Group leader in India.
    Within India's IT industry, the first nine months of 2007 saw more than
$113 million invested in 17 deals in the Information Services sector, a four-
fold increase over the $27 million invested in this sector during the same
period last year. Information Services includes many of today's Web-based
innovations, such as mapping services, social networks and online advertising.
    Also of note, venture capitalists committed $95 million in eight deals for
Communications and Networks companies in India during the first three quarters
of the year, the most deals and investment for the sector on record.
    The data also showed that service-oriented companies were also a popular
draw for venture capitalists investing in India's Business/Consumer/Retail
industry. Overall, the industry accounted for 21 deals and $376 million worth
of investment in the first nine months of 2007, but $329 million -- or 88% of
all investment in the industry -- went to 17 deals in the Consumer/Business
Services sector.
    "One reason service-oriented companies in India are so attractive to
investors is because they often do not require a great deal of capitalization
to get off the ground," said Jessica Canning, Director of Global Research for
Dow Jones VentureOne. "This is reflected by the fact that 88% of all venture
capital investment in India in the first nine months went to companies that
are already generating revenues."
    Early stage deals accounted for 63% of all investment activity in India in
the first three quarters of 2007 with $490 million invested in 42 first rounds
and three seed rounds.
    The investment figures included in this release are based on aggregate
findings of VentureOne's proprietary Chinese research and are contained in
VentureSource. This data was collected by surveying professional venture
capital firms, through in-depth interviews with company CEOs and CFOs, and
from secondary sources. These venture capital statistics are for equity
investments into early-stage, innovative companies and do not include
companies receiving funding solely from corporate, individual, and/or
government investors. No statement herein is to be construed as a
recommendation to buy or sell securities or to provide investment advice.
    About Ernst & Young
    Ernst & Young, a global leader in professional services, is committed to
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    About VentureOne
    Dow Jones VentureOne (www.venturecapital.dowjones.com ), a unit of Dow
Jones Financial Information Services, has been the leading provider of finance
and investment data to the venture capital industry for 20 years.
VentureSource, a sophisticated electronic database on the venture capital
industry, is published by VentureOne. Dow Jones produces sector-specific
products and events for the private equity, venture capital and diversified
markets including VentureWire, Private Equity Analyst and Daily Bankruptcy
Review.
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SOURCE  Dow Jones VentureOne
Adam Wade of Dow Jones VentureOne, +1-415-439-6666, [email protected]; or
Puja Gupta of Ernst & Young, +91-124-464-4000, [email protected]