Bright ideas will continue to receive venture capital (VC) funding despite the slowdown, though the average size of the transactions could whittle down to less than $3 million. A large contingent belonging to the VC community, participating in an entrepreneurship event in Bangalore, told Financial Chronicle that big ideas knew no financial meltdown.

IDG Ventures India managing partner Sudhir Sethi told FC that his company alone was approached by some 1,200 companies over the last two years. “I haven’t seen any slowdown in the past six months, when there has been an economic slowdown either,” he said. But he cautioned that the average deal size will reduce.

Typically, Indian start-ups receive VC funding to the tune of $5-7 million at an early stage. But that's going to get sliced down to the sub $3 million range, as VCs look for quicker and safer returns.

"About 60 per cent of the companies getting funding still belong to the technology sector," said Sethi. "We are looking at disruptive technologies that break new ground. Healthcare is definitely one sector that has been receiving a good look-in," he added.

VCs invested $2.17 billion across 366 deals in India since January 2006. The venture funding in 2007 touched $873 million through 142 deals. Between January and October this year, early-stage investments worth $672 million was struck by way of 112 deals, according to VC tracking firm Venture Intelligence.

Helion Ventures managing director Ashish Gupta said it was only a matter of ground-breaking ideas which can offer sustained results. "There are enough funds floating around," he said. Helion Ventures had announced a $120 million fund in March, but most of that remain unused. But he too was wary about the quantum of funding.

VCs in India are still flush with funds, and it is estimated that around $1 billion of cash is lying unused. The latest has been Sequoia Capital raising a $725 million India-centric late-stage fund.

According to Pradip Kanakia, KPMG's national head of markets, it was difficult to expect high quantum of funding in these trying times. "I can foresee the size of transactions coming down in these times,"

he said. But the quality of ventures seem to be going up all the time. "I, for one, can vouch for this steep climb in quality of the ventures," said IDG's Sethi.