Things You Must Know About Venture Capital Financing In India

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Published: 06th February 2017
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Venture Capital Financing In India

Ever since the venture capital financing industry has stepped in to the Indian sub-continent, the whole entrepreneurial ecosystem of the country has started gaining the much-needed momentum. Though still in its early stages, the venture capital industry in India has already become actively involved in boosting various startups. The recent success of the e-commerce giant, Flipkart, is a superb example of the expanding VC effect in the country.

If you have a unique business idea for which you are planning to raise venture capital in India, you might find this article helpful in helping you gather a basic knowledge about the venture capital firms in India and how they operate.

How Do Venture Capital Firms Operate In India

Venture Capital firms in India typically look for high potential startups. They look for investments where they can make an exit either through an IPO or a merger/acquisition. The investors mostly rely on recommendations from those in their close circles as the investment they make involves huge amount of risk.

Most of the VC firms prefer to make later stage investments as by this time the level of risk associated with startups reduces significantly. However, there are many firms that consider seed stage venture capital financing too which is a great respite for entrepreneurs who have ideas but need capital to materialize it.

The VCs usually expect a ROI of at least 25 percent to 35 percent on each year's investment in startups. During this period, they also take part in the investee company's managerial and financial affairs so as to ensure that the fund gets utilized in the best possible way to bring in the expected ROI. Once the investment tenure is over, the investors take their share of profit and exit the venture.

These days, the fast developing IT sector of India is a major attraction for the growing VC industry. However, there are many other sectors like Energy, Manufacturing, Real Estate, Financial Services, Healthcare, etc. that are also emerging as lucrative markets.

Major Cities Attracting VC Investments

There are certain cities in India that are the major investment areas such as Delhi, Mumbai, Chennai, Pune, Hyderabad, Kerala, Bangalore and other cities. Most of these cities are home to various high tech startups and other industries like finance, telecom, pharmaceuticals, etc. VCs based in these cities keep their focus on startups targeting a potential market and having an innovative business model.

Various Categories Of VC Funds In India

Central government controlled development finance firms. Firm operating these funds include ICICI Venture Funds, SIDBI Venture Capital Funds and others.

State government controlled development finance firms like Gujarat Venture Capital Fund, Kerala Venture Capital Fund.

Private organization controlled VC funds like Infinity Venture India Fund.

Public banks like SBI Capital Market and Canbank Venture Capital Fund.

Overseas venture capital funds like Welden International Investment Group and HSBC Private Equity.

Some Of The Major VC Firms In India

Helion Ventures: Invests in technology technology like Software, Enterprise Software, Mobility, Online Marketing, etc. Makes early to mid-stage investments.

Canaan Partners: Invests in Healthcare, Biotech and Software. Makes seed stage to later stage investment along with private equity and debt financing.

Matrix Partners: Invests in Mobile, Ecommerce, Software, Enterprise Software, Online Marketing, etc. Makes seed stage and early stage investments.

WestBridge Capital: Invests in iPhone, Android and mobiles. Makes early stage and later stage investments.

Band Of Angels: The VC firms invests in health and wellness and technology. Makes seed stage, early stage and later stage investments.

New Enterprise Associates: Invests in Mobile, Biotechnology and Software. Makes seed stage, early stage and later stage investments along with private equity and debt financing.

Battery Ventures: Invests in Software, Enterprise Software and analytics. Makes seed stage, early stage and later stage investments apart from it is also involved in private equity and debt financing

Nexus India Capital: Invests in Business consumer, SAAS, Enterprise Technology, Mobile, Consumer Services and Consumer Internet. Makes seed stage, early stage and later stage investments.

Jumpstart Ventures: Invests in E commerce, Software and Internet. Makes early stage, later stage and debt financing.


Attracting a venture capitalist isn't that tough provided you come up with a unique product or service that can give a definite direction to a certain group of people. One of the best strategies to acquire VC funding with ease is to raise fund from other sources before approaching a VC firm. This is to give the investor the confidence to invest in your startup. For a startup, that has already raised fund once, it is much easier to convince a venture capitalist for the second and third rounds.

So are you ready to jump into the campaign to attract venture capital financing? Do share with us your experiences in the comment box given below.

For more information or any assistance regarding venture capital raising, feel free tyo visit Merger Alpha

Good Luck!

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