After raising funds and setting up teams in the last 18 months, venture capitalists (VCs) are now ready for some serious action. Investments will accelerate in 2008 and teams will be expanded to accommodate the increase in deal flow. Firms such as Matrix Partners India, Norwest Venture Partners and Canaan Partners will add investment partners while ePlanet Ventures, Helion Venture Partners and NEA IndoUS Ventures plan to hire associates at different levels. The year 2007 saw VC investments scale $900 million (Rs3,546 crore), according to industry reports. VCs invested more than $777 million in 57 deals in the first nine months of 2007, according to Dow Jones VentureOne and Ernst and Young. This is about five times the $158 million invested in the same period in 2006. Silicon Valley’s best, such as Norwest Venture Partners and Draper Fisher Jurvetson set up offices here. Bessemer Venture Partners earmarked a third of its $1 billion global fund for India. New sectors, old sectors Education and energy top the list of emerging sectors VCs are keen to invest in. Online learning services have started attracting investments—in the last three months, three companies— Hurix Systems Pvt. Ltd, TutorVista.com and 24×7 Learning Solutions Pvt. Ltd—together landed funding of close to $12 million. Firms are also scouting for clean tech companies to bet on. VCs continue to remain bullish on the consumer Internet and wireless space. Some, however, are cautious about investing in mobile services companies, while the operator continues to keep the lion’s share of the revenues. […]

Private equity funds are set to gain prominence in the board rooms of India Inc. in 2008. They would play an active role in ensuring corporate governance and undertaking management buyouts. “We expect to see more changes, increased transparency, corporate governance and shareholder wealth generation as private equity influences corporate behaviour within the board rooms,” said Harish HV, partner, Corporate Advisory Services, Grant Thornton. Private equity investments crossed $17 billion in calendar 2007 and are expected to grow by 50 per cent in the year 2008. Data compiled by the international accounting firm Grant Thornton revealed an investment of $17.14 billion in the year 2007. “PE investments will grow to $25 billion in the year 2008,” added Harish. The PE funds are likely to favour infrastructure and allied sectors in 2008, while media and manufacturing could emerge as the dark horses. […]

The year 2007 will end as a remarkable year for the private equity (PE) business in India. Recent reports have suggested that PE business may have crossed $17 billion for the year, more than double of $7.5 billion done in 2006. India has also reportedly overtaken China in PE stakes. According to media reports, till October ’07, India had seen around $5 billion more of deals as compared to China. PE fund raising has matched or exceeded the public market — IPO/FPO — route in recent years. In 2006, fund raising from PEs had exceeded domestic IPOs and FPOs by around 50%. In 2007, IPO/FPO route almost tripled to over Rs 73,000 crore ($18 billion). So while PE could not exceed domestic public markets, it still nearly matched it. PE has clearly emerged a credible alternative to IPOs/FPOs for late stage and listed companies. After these excellent numbers, where do we go in 2008? First point — clearly no one expects any slowdowns. These numbers can only grow. “Investors are very bullish on the India story. More money is clearly headed India’s way,” says Sarath Naru, managing partner, Venture East. “New funds are still entering, and India allocations of global funds continue to increase,” says Srini Vudayagiri, managing director, Lightspeed Venture Partners. […]