Will the record high VC investments, catalyzed by E-Commerce deals, sustain?

Hi All,

The following data points from the Venture Intelligence India Venture Capital Report-2011 report quantifies the resurgence of VC investments in India catalyzed by the well known excitement for the E-Commerce segment:

Venture Capital firms invested about $1.09 billion over 209 deals in India during the twelve months ended December 2011 to touch all time high levels. The amount invested during 2011 was significantly higher compared to 2010 (which had witnessed $699 million being invested across 132 deals) and also compared to the previous record year of 2008 (which had witnessed $980 million being invested across 173 deals).

§ With 111 investments worth about $506 million, IT & ITES companies account for 53% and 46% of VC investments in volume and value terms respectively. Four out of the top five IT deals went to Online Services companies (including especially E-Commerce), which as a sector attracted a record 64 VC investments worth $238 million in 2011 (compared to just 19 investments worth $91 million in 2010). Mobile VAS companies attracted 13 VC investments worth $48 million in 2011. (Since our definition of VC investment caps out at $20 million, these figures do not include the “private equity” rounds in these sectors like the $200 million commitment by SoftBank to mobile advertising firm InMobi or the $40 million rounds raised by e-commerce firms SnapDeal.com and Fashion and You).

§ Early Stage investments (1st or 2nd round investments into companies < 5 years old, in our definition) accounted for 70% of all VC investments in volume terms and 52% in value terms during 2011

Is this pace of VC investments going to be sustained in 2012 and beyond? What do entrepreneurs and investors – both young and “old” – in this sector feel? I hope to find out some answers at the Venture Intelligence APEX’12 Private Equity & Venture Capital Summit, on February 14 at Mumbai, which features a special panel discussion on the Internet & Mobile sector. The panel includes entrepreneur speakers like Alok Kejriwal, Co-founder & CEO, Games2Win and Vikhyat Srivastava, Co-founder, Groffr and investor speakers like Mahesh Murthy, Founding Partner, Seedfund and Sunil Goyal, CEO of YourNest.

We have requested the speakers to provide, apart from their outlook for the sector over the next 3-5 years, actionable takeaways in terms of “what works, what doesn’t” – on important aspects like execution, fund raising, etc. – in the Indian context. The event will also feature other interesting panel discussions including “Big Debate: Majority Control” in which speakers will provide their perspective on the advantages and problems associated with investors holding controlling stakes in the ventures they fund. Other PE/VC Firms participating in the event include Ascent Capital, Exponentia Capital, FootPrint Ventures, Gaja Capital, Headland Capital, India Value Fund, Matrix Partners India, Peepul Capital, Sequoia Capital India, etc. A more detailed agenda of the APEX’12 Summit can be viewed at http://ventureintelligence.in/downloads/APEX12-Summit-Agenda.pdf

Hope some members of this forum will be able to join us at the event. For participation details, please email apex@ventureintelligence.in or call Gaurav at +91-44-4218-5180

Cheers

Arun

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