If you are young, have a brilliant business plan and an innovative proof-of-concept, this is the right time to seek funding from the nearest venture capitalist. So far this year, Indian firms have garnered over $622 million in venture capital, compared with $780 million in all of 2007, according to latest industry data.

Kanwaljit Singh, managing director of Helion Venture Partners, an independent VC firm, in an exclusive interview with Financial Chronicle, says this is the right time to seek VC funds and over the year India will have more private equity firms and VCs rushing to provide capital for enterprising entrepreneurs, especially in the technology, financial services and retail spaces. Excerpts:

Q. Given the current market scenario and the cascading effect of the US downturn, can Indian firms look

forward to getting venture capital

support?

Typically, when we (Helion) are deciding on the funding opportunities after looking through the business concept we expect a return on investment of 5 times (valuation).

We had had companies, especially in the e-commerce space, pitching unrealistic valuations—nearly 10 times—when seeking funds. The downturn has actually been a positive, as these firms are getting more realistic. We invest in companies looking at ROIs over a 3-5 year time-frame.

Q. Helion has just completed a second round India fund of $210 million. Does this mean that you have exhausted the earlier round of $140 million since you now have about 11 companies including MakeMyTrip.com and Amba Research in your portfolio?

We are in the process of wrapping up our initial funding round, and in the process of closing the deals from the earlier funding. The latest funds haven’t been utilised, but we are in the process of scouting opportunities. Almost half of our portfolio companies are in the process of raising funds from outside sources, or are in the process of initiating this.

Q. Are you looking to move beyond technology funding?

Helion is interested in companies servicing the retail side; education; consumer space and financial services. We are also looking actively at the health & beauty segment. We would like to invest in companies that have a solid management in place, sound business concept and can scale up to achieve returns within our time frame. In the education sector, for instance, we would like to invest in firms providing vocational training; language training; online tutoring and even pre-school. What we would like to do is bring about institutionalization of the tution business in India, which is estimated to be about Rs 6,000 – 8,000 crore.

Q. Do you fund big-ticket deals or only small ventures interest you?

Generally, we fund up to $10 million, and are keen to invest in mid-stage companies who already have a business strategy in place.

We take a 20-40 per cent stake in equity, and prefer that the entrepreneurs have a majority stake because this will sustain their passion and keep business interest going. We bring in senior management people if required to move companies to achieve scaleability, and execution.

Q. Any tips for budding entrepreneurs, especially when they go VC hunting?

We see entrepreneurs write a business plan only when they go looking for outside sources of funding (like a VC), but they need to understand that it is just as imperative that they write a business plan for themselves. This will bring in conviction that they can win. And one must remember, Indian will continue to hold great attraction for global VCs, so if ever there is a right time to seek funds, it is now.