Early stage investments accounted for most of the money spent by Venture Capitalists, who invested $762 million across 206 deals in 2012, according to a study.

The study, by Venture Intelligence, said that investment activity declined by 7.2% over 2011 and amount invested declined by 30 %. In 2011, VCs invested $1,094 million across 222 deals.

Early Stage investments accounted for 82% of all VC investments in volume terms and 58% in value terms during 2012.

VC investments declined in 2012 compared to 2011 as companies like Flipkart, JustDial, Pubmatic, and Quikr had raised significant investments in the previous year, said Arun Natarajan, Founder and CEO of Venture Intelligence.

In 2011, e-commerce firm Flipkart raised $150 million from South Africa’s Naspers, Iconq capital and existing investors. Mumbai based local search firm JustDial, online advertising firm Pubmatic and classifieds Quikr raised $60 million, $45 million and $32 million respectively in 2011 from investors.

VC Activity in 2012

VC Activity in 2012

Insights

  • With 133 investments worth about $381 million, the Information Technology and IT-Enabled Services (IT & ITES) industry retained its status as the favorite among VC investors during 2012 accounting for 65% of the investments (50% in value terms). The volume of investments in IT & ITES climbed 8% over that in 2011.
  • Healthcare & Life Sciences industry emerged as the second favorite destination for VC investors, attracting 18 investments worth $98 million during the year.
  • Education industry came in third attracting 14 investments worth $53 million.
  • Financial services and Energy industry were the fourth and fifth favorite industries attracting 10 investments (worth $55 million) and 9 investments ($62 million) respectively.

Most active VC

  • Blume Ventures was the most active VC investor during 2012 with 23 investments, a large number of which was made into online services companies.
  • Blume was followed by Accel India and Sequoia Capital India with 12 investments each. While Accel India made 10 new investments, Sequoia made eight new investments.
  • Nexus Ventures and IDG Ventures India came in next with nine investments each. Nexus and IDG made six and four new investments respectively.
  • Kalaari Capital (formerly IndoUS Ventures) made eight investments while Helion Ventures and Inventus Capital Partners made seven investments each in India-based companies.

Region wise distribution

Companies based in South India accounted for 45% of all VC investments (56% by value) during 2012. Their peers in Western India accounted for 25% of the pie in 2012 (12% by value). Companies based in North India accounted for 23% of the investments in 2010 (22% by value).

Companies headquartered in Bangalore were the favorite among VC investors during 2012 attracting 62 investments, followed by National Capital Region (including New Delhi, Gurgaon and Noida) based companies that accounted for 45 investments and Mumbai based companies with 39 investments. Chennai and Hyderabad followed with 14 deals and 12 deals respectively.