Venture capital funds invested $1.1 billion in India in 2002 in 65 deals, with the largest investment being the $272.6 million investment by the Government of Singapore Investment Corporation in ICICI Bank Ltd.

According to a recent National Association of Software and Service Companies report, over 80 per cent of the venture capital investments in the country in the last year has gone into existing, and in most cases profitable companies.

The second largest venture capital investment was the $108.3 million investment by GE Equity in Patni Computer Systems, while the third largest investment was in the broadcasting company Sony Entertainment Television India, which received $102.4 million investment from CDC Capital.

The Nasscom study also said that most of the venture capital investment are focused on expansion, nearly 90 per cent in 2002 from 49 per cent in 2001. Consequently, funding of startups declined from 36 per cent in 2001 to less than 10 per cent in 2002.

"Venture funds that focus on later stage deals are finding fewer traditional later stage opportunities. As a result venture capital funds are finding that only new investments that fit their focus are expansion stage deals that require more time to mature before exit is a possibility," the Nasscom report points out.

Business process outsourcing was the flavour of the year, with about $100 million invested in 2002, with Daksh and Progeon getting $21 million and $20 million, respectively. Nasscom also predicts, "This flavour is likely to continue in 2003."

The report also points out that despite the significant hype surrounding the biotechnology sector, investments in this sector till date are negligible.

It is estimated that about 5 biotechnology companies received investments to the tune of $60 million in 2002.

The report also points out that in sectors such as media, investments were concentrated on large, established firms such as Zee, UTV, Sony and Vijay TV.

Some of the larger investments that happened in 2002 were, International Finance Corporation's $80 million investment in Escotel Telecommunications and the $38 million investment in Jain Irrigation Systems by Texas Pacific Group.

Big deals

• The larget deal was by the Government of Singapore Investment Corporation in  ICICI Bank at $272.6 mn.
• GE Equity's $108.3 mn investment in Patni Computer Systems is the second largest.
• Funding of startups declined from 36 per cent in 2001 to less than 10 per cent in 2002.