Venture capital (VC) funds are lining up to invest money in Indian technology sector as never before. A whopping $5-6 billion is waiting to get invested in the tech and services sectors in the next 6-9 months, industry sources say.

VC investment, as per the Asian Venture Capital Journal, during the first half of 2006 was a record $3.6 billion in India, showing a staggering 400 per cent growth over the same period last year. Tech funds accounted for a lion’s share of this money. Though this is less than the $5 billion received by China, India has signed more deals.

Says Rishi Navani, Founding Managing Director, Matrix Partners India: ‘‘I think India is attractive, there is strong economic growth and as a result in various industries the quality of entrepreneurs has also improved significantly’’. Moreover, the Indian tech story is continuing with companies putting up a good performance over the years.

This is just the beginning. More VC funds are waiting in the wings. Industry sources say that over 44 US-based funds want to invest in start-ups and early-stage companies in the country.

In late August, the $1.4 billion fund IDG Ventures, a pioneer in funding start-ups, announced a $150-million IDG Ventures India Fund. This fund will invest between $0.5 million and $5 million in early-stage tech firms and $10 million in high-growth firms.

Says Sudhir Sethi, the Managing General Partner of IDG Ventures India, ‘‘We want to invest in high potential, futuristic firms which want to go global and not limit its operations to India. Our prime focus will be technology and tech-enabled ventures. Though the tech venture scenario is very competitive in the country, very few players are operating in this space who invest in start-ups and early stages of development’’.

... contd.