There is no dearth of funding in India and that can be clearly seen in the second quarter of 2008. According to the Quarterly India Venture Capital Report released yesterday by Dow Jones VentureSource, advertising start-ups have received maximum funding - $89 million-nearly 37% of the region’s quarterly investment total-went to five advertising/marketing companies, more than any other sector.

The companies that got funded are as follows:

1. Bangalore-based online advertising network Ozone Media Solutions Pvt Ltd has received its first round of funding from IDG Ventures India - It’s rumored to be a $4 million funding deal.

2. $70 million second round for Laqshya Media of Mumbai, the second-largest deal ever completed in India.

3.Mumbai’s web-based advertising platform Ideacts Innovations raised $5 million from Sequoia Capital India.

4. Online video advertising startup Jivox raised $10.7 million in Series A funding from Helion Venture Partners and Opus Capital. Opus had earlier seeded the company with $2.7 million.

5. Emnet Samsara Media Pvt. Ltd funded by Intel Capital. Emnet Samsar Media Pvt. Ltd. is a digital advertising company that focuses on the public transportation sector.

On Advertising sector receiving maximum funds, Jessica Canning, director of global research for Dow Jones VentureSource said . “…This highlights two growing trends within the region — one being a growing interest in advertising plays that capitalize on India’s emerging infrastructure and growing Internet usage; the other being an increase in second-round deals, which is expected as VCs are helping their portfolio companies expand and steering them toward liquidity.”

Interesting Stats:

• India attracted $238 million in venture investment with 17 deals closed in the second quarter, a
• 120% increase over the $108 million invested in 12 deals during the same period in 2007.
• 7 second-round deals completed in the second quarter - total of $161 million.
• 10 seed and first round deals were also completed during the quarter, accounting for nearly $77 million in investment

Ms. Canning added: “While the size of venture deals in the U.S., Europe and even China continues to climb, venture capitalists have shown some restraint in terms of investments in India, due largely to the risk still associated with this emerging region. In fact, since we began tracking venture investment in India, the median deal size has dropped from $17 million in 2005 to $10 million in 2006 and now to $8 million in the first six months of 2008.”

Yet we have seen Venture Capital firms raising funds to invest. A good example of this is Nexus raising second fund of $220 M, after fully committing its first $100 M fund. Some time back Business Standard reported saying Seedfund is raising a $30 million fund.

Since 2006 India has seen a lot of Foreign VCs funding start ups and growth of Indian Venture Capital firms. By 2010 we should start seeing some good returns. Let’s hope by then the VC bubble doesn’t burst.

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