South Asian Firms Raise $1B in First Half of 2008

The following article is from INDIAnewEngland.com.

Overall venture capital investing rose in 2007 with the most deals and capital invested since 2001 -- and South Asian entrepreneurs played their part in the stellar year, raising just over $2 billion.

In addition, they are off to a consistent start this year – raising just over $1 billion in venture capital in the first six months of 2008 – in a bid to match last year’s watershed mark.

These numbers are part of a recently released survey of venture capital raised by US-based, South Asian-run companies completed by the IndUS Business Journal, INDIA New England’s sister publication.

In 2006, South Asian-run companies raised $1.51 billion in venture capital.

The 37 percent increase to $2.07 billion in funding raised in 2007 is one of the largest jumps in year-to-year funding recorded since the IndUS Business Journal began its venture capital survey in 2002.

In 2007, 130 South Asian-run companies raked in venture capital funding, compared to 106 in 2006.

South Asian entrepreneurs successfully vied for 6.92 percent of the total venture capital raised by U.S. companies in 2007.

U.S. companies raised $29.9 billion last year, according Dow Jones VentureSource, which is published by News Corp. subsidiary Dow Jones & Co. The total is an 8 percent increase over the $25.75 billion in venture capital raised by all U.S. companies in 2006.

South Asian-run companies dwarfed the 8 percent national increase by hauling in 37 percent more funding in 2007 than in 2006. They also doubled the national average of venture capital per deal.

The average deal size for South Asian companies last year was $15.78 million, according to the IndUS Business Journal survey, compared to an average deal size of $7.6 million for all U.S. companies, as reported by Dow Jones VentureSource.

According to Mark Connors, IndUS Business Journal research associate, the dollar amounts and number of deals reported in the newspaper’s venture capital survey are conservative because some companies didn’t respond to inquiries or don’t release investment numbers.

The top South Asian venture capital recipients in the 2007 survey include: 
     A123 Systems of Watertown, Mass., with $70 million; 
     Telsima Corp. of Sunnyvale, Calif., with $50 million;
     Agami Systems of Sunnyvale, Calif., with $50 million;
     Solaria Corp. of Fremont, Calif., with $50 million; and
     Novarra of Itasca, Ill., with $50 million.

A123 Systems is developing high-power lithium ion batteries. Tech veteran Desh Deshpande is chairman of A123 Systems. The company’s investors include General Electric, CMEA Ventures, FA Technology Ventures, Sequoia Capital, North Bridge Venture Partners and Proctor & Gamble.

The top five states for venture capital raised by South Asian companies in 2007 are:
     California, with 77 companies raising $1.2 billion;
     Massachusetts, with 13 companies raising $233 million;
     Illinois, with three companies raising $124 million;
     New Jersey, with four companies raising $66 million; and
     Virginia, with four companies raising $60.7 million.

California is once again the top state for venture capital raised by South Asian companies. In 2006, California also was first with 67 companies raising $1.02 billion.

Massachusetts remained the runner-up to California. However, the state more than doubled its venture capital raised last year. In 2006, 10 Massachusetts companies raised just $96 million.

Illinois and Virginia burst onto the South Asian venture capital scene in 2007, surpassing New York and Georgia, which graced 2006’s top five list.

South Asian-run companies have continued to hold steady in venture capital funding in the first half of 2008 compared to 2007, but their money-grabbing consistency has greatly outpaced the market, with Dow Jones VentureSource reporting that overall venture capital investment in U.S. companies has dropped off 12 percent in the second quarter of 2008 compared to the same period the previous year.

South Asian entrepreneurs raised $1.07 billion in the first six months of 2008, a slight improvement over the $924 million they raised in the first six months of 2006, according to the IndUS Business Journal’s survey.

The average venture capital deal size for South Asian-run companies in the United States was $19.5 million in the first half of 2008, almost three times the national average of $7.5 million, according to Dow Jones VentureSource.

The top South Asian venture capital recipients for the first six months of 2008 include:
     Range Fuels Inc. of Broomfield, Colo., with $166 million;
     SunEdison LLC of Beltsville, Md., with $131 million;
     Kythera Biopharmaceuticals of Calabasas, Calif., with $40 million;
     Altierre Corp. of San Jose, Calif., with $30 million; and
     Xactly Corp. of San Jose, Calif., with $30 million.

Range Fuels, founded by Vinod Khosla in 2006, is a green technology company that converts plants and lumber into ethanol. Investors include: Morgan Stanley Capital Group, Passport Capital, BlueMountain, Khosla Ventures, Leaf Clean Energy Co. and Pacific Corporate Group.

The top five states for venture capital raised by South Asian-run companies in the first six months of 2008 are: 
     California, with 32 companies raising $504 million; 
     Colorado, with one company raising $166 million;
     Maryland with one company raising $131 million;
     Georgia, with one company raising $50 million; and
     Virginia, with two companies raising $38.5 million.

source:  www.INDIAnewEngland.com

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