India Bucks Bigger-Is-Better Trend as Smaller, Fewer Deals Cause 27% Drop in VC Investment in Q1

Dow Jones VentureSource Finds VC Investment in India Falls to $99 Million as Deal Flow Remains Steady; 67% of All Investment Went to Consumer/Business Services Sector 


BANGALORE, MUMBAI and NEW DELHI, India, May 22  /PRNewswire/ -- While the size of venture capital deals grows in the U.S., Europe and China, venture capitalists continue to do more thrifty deals in India, according to the Quarterly India Venture Capital Report released today by Dow Jones VentureSource (http://venturecapital.dowjones.com/), the premier data provider for the venture capital industry.  The median size of a venture investment in an India-based company in the first quarter of 2008 was $4.1 million, down from $8.3 million in 2007 and well below the medians seen in the U.S. ($7.1 million), Europe ($4.5 million) and China ($10 million) in the first quarter.

Overall, the region attracted $99 million in venture investment with 16 deals completed, a 27% drop from the fourth quarter that saw a record $135 million put into 17 deals.

"Venture investment in India did see a drop in the first quarter from the fourth quarter but it's not really accurate to compare this year's first quarter to the big spike we saw in the first quarter of 2007 when $513 million was put into 37 deals," said Jessica Canning, Director of Global Research for Dow Jones VentureSource.  "Our data shows that deal activity in India remains steady and the drop in investment during the first quarter is simply a result of smaller deals, not an overall pullback."

The report found nearly 67% of all venture investment in India -- some $67 million-went to seven consumer/business services companies.  The largest deal in this area was the $26 million third round for ClearTrip Travel Services, based in Mumbai.

The data showed that India's health care industry is still in its infancy, as only two biopharmaceutical deals totaling $11 million closed in the first quarter. The information technology (IT) industry generated six deals in the first quarter, raising $19 million. The software sector was the most popular IT area, as it accounted for three of the deals and $10 million.

Ms. Canning added: "While other regional markets are weighed down by capital-heavy industries like health care and energy, India's modern economy is still in its infancy and everyday services like printing and travel booking are in high demand-and it takes relatively little capital and time to develop these kinds of companies."

In fact, of the 16 deals completed in the first quarter, 10 were for companies already shipping products and generating revenues while another three were for companies with established profitability.  Together, they accounted for 90% of India's quarterly investment.

The report also found that while first rounds made up half of all deals done in the first quarter with eight, nearly 52% of all capital went to five later-stage deals.

The Quarterly India Venture Capital Report covers venture capital investment specifically, which Dow Jones VentureSource 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.

For more information or to request a demonstration of Dow Jones VentureSource, visit http://venturecapital.dowjones.com/ or call 866-291-1800.

The investment figures included in this release are based on aggregate findings of VentureSource's proprietary Indian 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 DOW JONES

Dow Jones & Company (http://www.dowjones.com/) is a News Corporation company (NYSE: NWS, NWS.A; ASX: NWS, NWSLV; http://www.newscorp.com/). Dow Jones is a leading provider of global business news and information services. Its Consumer Media Group publishes The Wall Street Journal, Barron's, MarketWatch and the Far Eastern Economic Review. Its Enterprise Media Group includes Dow Jones Newswires, Dow Jones Factiva, Dow Jones Client Solutions, Dow Jones Indexes and Dow Jones Financial Information Services. Its Local Media Group operates community-based information franchises. Dow Jones owns 50% of SmartMoney and 33% of STOXX Ltd. and provides news content to radio stations in the U.S. 

DATASOURCE: Dow Jones & Company



CONTACT:  Adam Wade of Dow Jones Financial Information Services,

[phone], 



Web site:  http://www.dowjones.com/

http://venturecapital.dowjones.com/

http://www.newscorp.com/ 

Copyright