Venture capitalists invest $13 bn in emerging firms in 2008
The Economic Times, NEW DELHI, 22 February 2009: Venture capitalists invested over $ 13 billion in companies in emerging countries, including India and China, in 2008, much higher than their previous bets, even as global economic situation continued to deteriorate at a faster pace.

Venture capitalists (VCs)continued to seek out investment opportunities outside the US in 2008, as they put more than 13.4 billion dollar to work in 1,416 deals for emerging countries including India, China and Israel last year, as per global data provider Dow Jones VentureSource.

VCs, who invest in startups and small businesses, raised investments by nearly five per cent from over 12.8 billion dollar in 1,711 deals outside the US in 2007.

"The venture capital industry continues to rapidly globalise as investors are eager to find and tap new areas of innovation, especially in emerging economies like China and India," Dow Jones VentureSource Director of global research Jessica Canning said.

VC investments in India-based companies rose three per cent to $ 864 million in 2008 with 80 deals completed. Last year, they had put in 842 million dollar in 85 deals.

In India, majority of investments went to its business and financial services companies, which garnered a record $ 368 million in 26 deals in 2008.

The investments in the country last year were more than double the 144 million dollar inflows through 20 deals in 2007, the report stated.

Further, the energy and utilities investment climbed some 75 per cent in 2008 to $ 70 million.

However, IT industry in the country saw investments drop as much as 45 per cent to $ 176 million in 2008 from $ 319 million in 2007.

According to VentureSource, India was the only region to see its deal size hold firm year-on-year, remaining unchanged at $ 8 million in 2008.

Interestingly, in China venture capitalists invested a record $ 4.2 billion in 245 deals in 2008, up from $ 2.8 billion in 290 deals in 2007.

Also, the average deal size in China is now the highest in the world at a record $ 10 million in 2008, it added.

Despite the increasing investments in companies in the emerging markets, the US remained the worlds biggest destination for VC investments, accounting for $ 28.8 billion through 2,550 deals in 2008.

However, Europe saw a late-year pullback in VC investment leading to an overall annual decline of 15 per cent. Investments fell from $ 7.6 billion in 2007 to $ 6.5 billion last year.