Investor Sentiment Dips in 2013, 18% Lower VC Activity Vs 2012

Investors turned cautious in 2013 with VCs investing only $805 million across 206 deals says a report.  This is an 18% dip from 2012 when the country saw VCs investing in over 252 transactions worth about $898 million. This is the second consecutive year of investment decline which had peaked in 2011.

VC investment India

Majority of all deals in 2013 came from the IT and IT enabled services (ITES) sectors. Education, financial services and the energy sector witnessed falling investor interest in 2013.

While sub-$5 million deals dominated in 2013 forming 69% of all investments, early stage investors led investment activity says the report by Venture Intelligence. Early stage investors made 63% of all investment activity which is a significant drop from the 83% made during 2012.

Top cities

41% of all VCs turned to South India for investments followed by 29% who turned to Western India. Most of the investments made in 2013 were of companies headquartered in Bangalore and Mumbai. Bangalore attracted the highest value with $214 million while Mumbai generated  $164 million in 2013.

VC investment India

2013’s largest investments came from CX Partners’ investment in restaurant chain Barbeque Nation and Matrix Partners’ and Tiger Global’s investment in online taxi booking service Olacabs. The investors funded both companies with $ 20 million each.

Who Got What

investment by industry
investment by industry

IT and ITES  

Investment activity – 63%

Online services companies accounted for 50% of IT and ITES investments attracting 68 investments worth $237 million in 2013. Enterprise software companies and mobile VAS companies followed suit with 29 investments and 22 investments each valued together at a combined $143 million. Both saw an uptick in investment activity and value of investments as compared to 2012 when enterprise software saw 21 deals and mobile VAS – 18.

Largest Deals By Company

Olacabs – $20 million from Matrix Partners India and Tiger Global

Cardekho – $15 million from Sequoia Capital

Healthkart – $14 million from Intel, Omidyar Network & Sequoia Capital

Scalearc – $12.3 million from Accel India and Nexus Ventures

Healthcare and lifesciences

Investment activity – 27%

15 of the 27 investments in the healthcare and lifesciences space came from clinics and specialised hospital chains.

Largest Deals by Company

Cloud Nine – $16.3 million from Sequoia Capital, Matrix Partners India

Rhea Healthcare – $13.5 million from Peepul Capital

Surya Childcare – $9 million from OrbiMed

Protea Medical – $8 million from Ventureast and Accel India

Agri Biz/ Food & Beverages

The agri business and food and beverages industry saw seven and six investments each.

Largest Deals by Company (Agri Biz)

Capricon Food Products – $10 million investment by Quadria India

Largest Deals by Company (Food & Beverages)

Barbeque Nation – $20 million by CX Partners

The Beer Cafe – $4.6 million from Mayfield

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