VC Activity in 2009 – Retail Boom vs. Internet Slump

2009 was a milestone year for Indian VC community – most of them decided to stay away from investing in Internet market and did a lip service to investing in ‘pure technology’ firms. Majority of investments happened in areas that matter, i.e. healthcare and offline businesses, while mobile did get a boost with investment in VAS as well as rich media platform startups.

Here are a few significant investment that happened in key industries in 2009:

Investment in Healthcare

Top 5 deals in healthcare :

• Mumbai Angels invests in early stage healthcare solutions company Insta Health
• GreyLock Invests $4mn in HealthHiway, Healthcare SaaS startup
• Aavishkaar India Invests in Swas Healthcare, Naturopathy clinics and hospitals
• Nexus Venture Partners Invests in Deccan Healthcare, Nutraceutical Firm
• Rural Healthcare Startup, Vaatsalya raises fund from Oasis and Seedfund

Investment in Offline Businesses

Rural India and offline setups are growth sectors and a good number of investments happened in these industries in 2009:

• Shell Foundation Invested in Husk Power Systems (converts Rice to Electricity)
• Rural India Tech Solution Provider, CoOptions Raised $10mn from Walden and Nadathur Investments
• Aavishkar Fund Invested in Zameen Organic, Cotton Marketing Company
• Infant maternal care in India gets the attention of the Gates Foundation ($41mn Fund)

Retail Businesses

• LightSpeed Ventures Invested in Essel Group’s Itz Cash Card
• FIIT JEE raised Rs. 100 crores from Matrix Partners
• Helion Ventures Invested $3.3 million in Brand Calculus, Quick Service Restaurant Brands and You Look Great beauty chain
• Sequoia and SVB Invested in Ideacts, Cybercafe Advertising Platform [second round].
• Helion Ventures Invested in Getit Yellow Pages, which is foraying into online services.

Mobile Funding

VAS, Mobile TV were the pick of the season and surprisingly, no major investment happened in SMS based services.

Corp investments include Microsoft 20% stake in Affle and Rediff’s investment in Imere (LBS startup), while OnMobile raised $15mn from NVP India.

Other significant investment in Mobile space include:

• Mobile TV Content Aggregator Apalya Secures $3mn from IDG and Qualcomm Ventures
• Matrix India Invests in Mobile Classified Service, Ver se Innovation
• IMIMobile Raises $13mn from Sequoia and First Mark Capital

Funding in Internet Businesses

Nothing much to talk about. Very few investments happened in Internet businesses and the businesses that received VC funding have a strong offline support component to the business.

• RedBus.in Raises Series A from Inventus Capital
• Nexus Venture Partners Invests $4mn in Vdopia
• Accel India Invests in Flipkart
• Matrix India and Omidyar Network Invest in Quikr, Classifieds Site

Does that speak of something? Viability of pure play Internet business in India?

NRN

If there was one significant milestone India Inc achieved in 2009, it was NRN’s announcement of Catamaran fund. The fund will invest in healthcare, retail, technology and he is joined by his wife who sold stocks worth $92 mn, taking the fund corpus to $129mn.

What’s your take on VC investment in 2009? What trend do you foresee for 2010?