New Enterprise Associates, better known as NEA, said Thursday it is ready to invest $125 million to $175 million in India from its recently closed $2.5-billion fund.
Mark Perry, a general partner at the 28-year-old venture capital firm, said the investments will be mostly in growth-oriented companies.
However, the company has created an Indian arm called NEA IndoUS, which is raising a $150-million fund to be invested in early-stage companies in India. NEA has committed $30 million to this new fund, he said.
The new fund will be overseen by Vani Kola, who has moved from California to Bangalore, and Vinod Dham of NewPath Ventures, who will continue to operate from California.
Ms. Kola refused to comment on the fund as it’s still in the process of being raised. But Mr. Perry revealed that because most of their investments in other countries go into very early-stage companies, “almost at the garage stage,” he said they’d like to do the same in India.
The firm intends to carry out these plans through the India fund. “We get involved in all the risks: the technology risk, the market risk, and the business risk,” said Mr. Perry. “That’s our differentiation. And we stay invested for a long time.”
Apart from information technology and telecommunications, NEA will also invest in healthcare, biotech, and alternative energy startups in India.
Seeking Entrepreneurs
NEA is also looking for a couple of mentors: successful entrepreneurs in India who would like to get their hands dirty once again with startups, but this time with little risk to themselves.
Mr. Perry has been touring the Indian cities of Delhi, Hyderabad, Chennai, Pune, Bangalore, and Mumbai and he’s happy with the companies he’s seen.
“One of the most exciting discoveries I made is that the deal flow is excellent, of very good quality,” he said. “I’m more than convinced that we can do very good early-stage deals in India,” he added.
About half of the NEA fund targeted at India will go into late-stage companies. “Those who are looking for transformational capital—and are not ready for traditional private equity which is only a financial deal—will find us,” said Mr. Perry.
In August of this year, IDG Ventures announced a $150-million India fund. Sequoia India Capital followed it up with a $400-million fund (see Sequoia India Closes $400M Fund).
Research from eValueserve, a Delhi-based firm, shows that over 44 funds based in the United States are seeking to invest heavily in startups and early-stage companies in India.
Even if 40 of them raise an average of $100 million each, it would add up to $4 billion. Alok Aggarwal of eValueServe feels there may be too much money chasing too few deals in the short term.
Contact the writer:KShah@RedHerring.com
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