‘Venture capital funding hit by slowdown’

May 12th, 2009 - 8:33 pm ICT by IANS  

New Delhi, May 12 (IANS) Venture capital (VC) funding has fallen nearly 25 percent in recent months on account of the global slowdown, industry officials said here Tuesday.
“There have been an overall dip of 25 percent in venture capital funding since last year,” Rahul Chandra, director of venture capital firm Helion Advisors, told IANS.

Venture capital firms are private equity capital companies that invest in early-stage, high-potential growth companies. Investments are made in cash in exchange for shares in the invested company.

Earlier, while speaking at a Confederation of Indian Industry (CII) seminar on ‘Global Investments in Research and Development’, Chandra said: “Despite a dip in the number of deals we have signed, the quality of deals has improved significantly.”

However, the market sentiment is yet to pick up. “We as venture capitalists have also become cautious, though in our sector, it’s all about risk management,” he said.

“We are also looking for co-investors,” Chandra added.

According to him, the tough time will last another 12 months before the market begins to stabilise.

Saurabh Srivastava, chairman of Indian Venture Capital Association, agreed with Chandra.

“Though investment by venture capitalists have come down to one-third from what it was, still there are signs of recovery and we hope to crack better and more deals,” Srivastava said at the seminar.

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