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More early-stage foreign VCs arrive, but investments stay flat

FVCIs, which help early-stage companies by providing capital, has seen a steady rise in the last twelve months even as other investment vehicles like venture capital funds witness a decline.

twitter-logoNiti Kiran | July 10, 2015 | Updated 15:04 IST
More early-stage foreign VCs arrive, but investments stay flat
Photo: Reuters

The number of Foreign Venture Capital Investors (FVCIs), which help early-stage companies by providing capital, has seen a steady rise in the last twelve months even as other investment vehicles like venture capital funds witness a decline. The number of venture capital funds fell from 210 in December 2013 to 201 in December 2014, even as the number of FVCIs rose from 193 to 201 during the same period.


However, the same cannot be said on their investment pattern, which, over the three-four quarters has remained almost flat. This could be attributed to a cautious stance taken by these FVCIs as the market continues to show uncertainty.


On a sectoral front, over the past five quarters, IT saw around 10 per cent growth in the cumulative net investments by the FVCIs. The real estate sector is still deprived of the FVCIs fund, witnessing a 34 per cent dip in their cumulative net investments over the same period.


In December 2014, the market regulator allowed FVCIs to invest in the infrastructure sector to provide a much-need relief to the space. Recently, SEBI also allowed registrations of FVCIs as Foreign Portfolio Investors (FPIs), subject to certain conditions.

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