The Hindu Business Line : Canaan seeks to fund Internet, wireless cos

Investing in India
Canaan Partners looks at funding companies operating in the Internet, wireless services and IT sectors.
`Venture capital investment in India is growing, supported by a strong stock market activity.'

Chennai , Nov. 6

Canaan Partners, an early stage venture investor based in the US, is looking at funding companies operating in the Internet, wireless services and information technology space. "We are also looking at the services sector in areas like retail, telecom and financial services," said Mr Alok Mittal, Executive Director of Canaan Partners.

The company has short-listed 10 projects to fund, each ranging between $3 million and $5 million, Mr Mittal said. Canaan typically looks at about 100 projects a month and short lists about 10 that are further evaluated.

Invested projects

The company has currently invested in three projects in India — Aztec Software and Technology Services, BPO company e4e and Internet company Bharat Matrimony. Canaan and Yahoo! Inc have jointly invested about $8.65 million in Bharat Matrimony, said Mr Mittal. He did not share details of other investments.

"The potential for venture capital funding in India is about $1 billion, most of this being in the IT sector," he said.

He said venture capital investment in the country was growing and this was supported by a strong stock market activity. "Entrepreneurial skills are on the rise and the stock market is strong. Unlike in the 1990s, when the IT bubble burst, which lead to companies exiting India, this time growth and interest in funding Indian companies is strong," said Mr Mittal.

Destination India

He said about 15-20 venture capital companies were looking at India as opposed to the two-three companies in the late 1990s. Besides IT, real estate and retail projects were other areas of interest for venture capitalists. Canaan is organising a national-level business plan competition this November. About three companies would be selected from among the participants and funded by Canaan.

Canaan Partners has $2.4 billion capital under management and has invested in more than 230 companies across the globe in sectors like Internet and communications, semiconductors and energy and biotechnology.