Venture Capital Has Arrived In India Finally!

Venture capital investment in India surged 400 percent, to $3.6 billion, during the first half of 2006, compared with the same period last year, according to the Asian Venture Capital Journal. Though China outpaced India with $5 billion of investment for the first half, India surpassed its northern neighbor in volume of deals, with 124 transactions. Sequoia's new India fund, which will focus on later-stage investments, just closed with investments of $400 million. Sequoia Capital India II, which was raised in 2005 by WestBridge, focuses on early-stage companies.

But most of the investsments seem to be late stage funding, and angel funding is yet to take off in a big way. Travel sites like Travelguru and Cleartrip had attracted early funding though.

At least seven U.S. venture firms are raising funds specifically to invest in India. The list includes such established players as Draper Fisher Jurvetson and Matrix Partners, which recently closed a $150 million fund. Other firms, such as Battery Ventures, Norwest Venture Partners and Bessemer Venture Partners, have struck sizable high-tech deals. Bessemer took the further step of setting up an office in India in 2004, and it will soon have company. According to Indian news reports, venture giant New Enterprise Associates is teaming up with New Path Ventures to raise a $105 million fund, reportedly called NEA IndoUS, to invest in India, with the firms jointly opening shop in Bangalore. Other major U.S. venture players exploring their options in India are the Mayfield Fund and Greylock Partners.

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And people don't believe me when I say how exciting India is becoming.