The Hindu Business Line : Dotcoms on the radar of VCs

The Internet seems to be finally finding favour with private equity and venture capital firms in India, with the dotcom bust apparently long forgotten.

In 2006, at least five major deals have been struck between VC firms and home-grown Internet companies, indicating a revival in dotcoms. While the deal size may look paltry when compared to other sectors, what is significant is that the Internet features high on the list of a growing number of US-based venture capitalists looking to make inroads into the country.

Recent deals

For instance, the last few months have witnessed a number of deals involving popular dotcoms such as Naukri, Cleartrip, Shaadi, Travelguru and Yatra, among others. The deal size for these transactions has been relatively small, though analysts point out that with both American Internet companies such as Travelocity and venture capitalists on the prowl, the valuations are only going upwards.

While the US Internet major eBay had bought Indian auctions portal Baazee a couple of years ago, venture capital firms such as Canaan Partners, which are setting up base in India this year, have identified the Internet business as one of their focus areas.

The Silicon Valley-based venture investor Kleiner Perkins announced its re-entry in India with two investments — $3 million in online travel services firm Cleartrip and in jobs portal Naukri. WestBridge Capital Partners was one of the first ones to invest in this arena. The firm invested $7 million in Times Internet last year and topped it up with stake purchases in Travelguru and Shaadi.com this year. Further, Norwest Venture Partner made an investment in online travel services firm Yatra. In yet another transaction, reflective of the growing interest in the Internet business, Television Eighteen India Ltd acquired 50 per cent stake in the Indian operation of JobStreet.com.

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Dotcoms on the radar of VCs