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Venture capital records Q2 boost

Posted: 22 Jul 2009     Print Version  Bookmark and Share

Keywords:venture capital  hardware  communications 

Venture capital investments zoomed 32 per cent in Q2 to hit Rs.25,436.03 crore ($5.27 billion), up from Rs.19,306.29 crore ($4 billion) in Q1, the lowest level in a decade, according to Dow Jones VentureSource.

The quarter was still well below the Rs.40,205.34 crore ($8.33 billion) level recorded in Q2 08. The rebound comes amid a shift in dynamics to fewer smaller deals.

The quarter also was the first in which investments in healthcare outpaced those in IT. The healthcare sector received Rs.10,763.26 crore ($2.23 billion) in investments in the quarter compared to IT which attracted Rs.9,073.96 crore ($1.88 billion).

"Investors are diversifying their portfolios away from traditional investment areas like biopharmaceuticals and software towards segments like medical devices and information services while also pulling back on how much they are willing to invest in each deal," said Jessica Canning, director of global research for Dow Jones VentureSource.

Many major hardware electronics categories were down in Q2 from the previous quarter. Investments in communications slipped from Rs.1,428.67 crore to Rs.1,245.26 crore ($296 million to $258 million), computing fell from Rs.1,143.90 crore to Rs.888.09 crore ($237 million to $184 million) and semiconductors slid from Rs.820.52 crore to Rs.752.95 crore ($170 million to $156 million).

Medical devices bucked the trend, rising significantly to Rs.3,692.33 crore ($765 million) in Q2 from Rs.2,630.48 crore ($545 million) in the previous quarter. Investments in renewable energy also were up, rising to Rs.1,061.85 crore ($220 million) in Q2 from Rs.748.12 crore ($155 million) in Q1 09.

The median deal size overall fell to Rs.24.13 crore ($5 million) in Q2, down from Rs.38.61 crore ($8 million) a year ago, the lowest median deal size since 1999. As usual, California dominated venture capital activity in the second quarter with 42 per cent of the nation's deal flow and 46 per cent of the capital invested.

- EE Times

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