VCs may raise $2 billion new funds for Indian start-ups in 2015

Venture Capital investors are likely to raise $2 billion (Rs. 12,400 crore) this year to empower emerging businesses in India, according to an Economic Times report.

Earlier in 2014, Venture Capitalists raised over $1 billion to tap the opportunity of booming start-up sector. Investors like Accel Partners, Kalaari Capital and SAIF Partners have enjoyed significant returns from consumer internet ventures. More than 1,200 new ventures have emerged in 2014.

"We're seeing a rekindling of interest in the Indian market in the past 6-8 months. Exits remain a concern among limited partners (investors in venture capital funds)," said Karthik Reddy, managing partner, Blume Ventures, a Mumbai-based seed stage investor told ET.

"But they seem optimistic that the path to these exits is being built," he added.

Accel Partners, which raised $230 million in India-focused capital, plans to raise $250-275 million for its fourth India fund.

"In the new fund, the investment outlay for each company may go up to $10 million against $5-6 million now," ET quoted Prashanth Prakash, partner, Bangalore-based Accel Partners India.

While Bangalore-based early stage investor, Kalaari Capital, plans to raise $200-250 million. "We will be in the market this year to raise the next fund. But we will not be under pressure like we were in 2011,” said Rajesh Raju, MD, Kalaari Capital.

The report further said that SAIF Partners intends to raise $300-350 million in second India fund. Mumbai-based Blume Ventures plans to raise $60 million, while India Quotient is raising $24.3 million and KAE Capital to raise $50-60 million fund. IvyCap Ventures is raising a $150-million second fund and plans to raise $40-million.

"Some of our existing investors have already committed to the new fund," said Ivy-Cap managing partner Vikram Gupta.

Delhi-based Lok Capital is raising a $100-million second fund, of which $45 million is expected by June as reported by ET.

In 2013, the fund raising level of India-focused funds declined to $309 million. But in two years, nearly $3-billion fresh capital has landed in the start-ups space signalling a significant benefit for seed stage or pre-revenue start-ups. The overall investment of $2.1 billion has been done in 2014.

"Nearly 80% of our investments from the current fund are seed. We will continue with that strategy in the new fund," said Prakash of Accel, which typically invests $1 million at the seed stage.