Cannan to spend 25% of corpus in India

Global venture capital firm Canaan Partners is betting big on India. Reali-sing that India is expected to grow in excess of 6 per cent annually, the VC firm would be investing as much as 25 per cent of its entire corpus in India, compared with less than 10 per cent till a few years back. The total corpus for the company at the beginning of 2008 was $650 million, and a third of it has already been invested around the globe.

“India is a very imp-ortant market for us. There are many successful entre-preneurs brimming with bright ideas here. We would invest between 20 per cent and 25 per cent of the corpus money in India, which is far higher than earlier,” Alok Mittal, managing director of Canaan Partners, told Financial Chronicle. He further added that in the coming few years, India may attract even more investments out of the total corpus amount. About $400 million is yet to be invested around the world.

The company mainly invests in companies with high growth potentials. Typically, the investments start from around $5 million and may go up to $20 million with a gestation period ranging from 5-10 years.

Since setting up office in India in 2006, Canaan Partners has invested in 6 Indian companies includi-ng BharatMatrimony.com, a popular matri-monial web site and UnitedLex, a US based LPO with India operations. The VC firm, however, is yet to reap returns on these investments.

The news gains significance in the context of a sharp drop in VC and private equity deals in India over the last one-year. According to a report by Venture Intelligence, a company that tracks VC activity in India, VC deals have dropped by over 70 per cent. “VCs are reluctant to invest mainly in startup companies as the risk factor is very high. Nobody is willing to take that risk given the present conditions,” Mittal said. He added that it could take more than 3 years for any meaningful improvement in this segment of VC funding.

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