12 India Focused Venture Funds withdraw registration application

Call it the penguin effect, but the news is that 12 venture funds have withdrawn their registration application in the last few days.

Among the funds that withdrew applications, 5 are foreign VCs, while 7 are domestic funds. The total investment proposed by these funds is estimated at Rs 1,000-1,200 crore.

“In the wake of the continuing global financial crisis, investors have started defaulting on their outstanding commitments or are pressurising fund managers to return their existing contributions. These developments may be forcing several funds to reconsider or withdraw their existing venture capital fund applications” – source

VC activity in India

Q4 2008 witnessed major drop in VC activity – an approx drop of ~64% compared to the last quarter.

In Q4 2008, VCs invested $81mn over 16 deals, while they had invested $225mn (over 50 deals) in Q3 2008 and $227mn (over 45 deals) in Q4 2007. The total number of investments in 2008 stands at $740mn (over 125 deals), as against $876 million invested over 144 deals during 2007.

Also see: Top VC firms in India (in terms of activity)

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