CHAPTER 5

INDIAN VENTURE CAPITAL INDUSTRY

5.0 Introduction

In India venture capital plays a vital role in the development and growth of innovative
entrepreneurship. Prior to 1997, the private equity (PE) market was very small and
mostly based on official funding from the government and multilateral agencies such as
World Bank. The actual growth was observed during early days of dotcom boom with
entry of Foreign Institutional Investors (FIIs) (Adilakshmi and Jampala, 2007).
Subsequent to IT bubble, the seed stage funding declined substantially. However, the
market started recovering during 2004. This chapter presents different phases of growth
of VC/PE market in India. The distribution of venture capital investment across different
stages, industries and cities is discussed with the relevant facts and figures. The chapter
also presents a snapshot of the regulatory structure for venture capital funds in India.

5.1 Historical Evolution

History of venture capital in India dates back to early 70’s when Government of India
(GOI) appointed a committee under Late Shri R.S.Bhatt to find out the ways to fill a gap
in traditional financing available for funding startup companies based on absolutely new
innovative technologies. The committee recommended starting of venture capital
industry in India. VC financing was first introduced India during year1975 with the
setting up of Industrial Finance Corporation of India (IFCI) sponsored Risk Capital
Foundation (now known as IFCI Venture capital Fund Ltd.). In year 1976, a seed capital
scheme was introduced by The Industrial Development Bank of India (IDBI). Till year
1984, VC took the form of risk and seed capital (Chary, 2005). A venture capital fund
was set up by GOI in year 1985 for providing equity capital for projects attempting
commercial applications of the indigenous technology (Nigam, 2001). However, the
concept of VC financing got statutory recognition for the first time in the fiscal budget
1986-87 when a cess of 5% was levied on all know-how import payments to create a
pool of funds for venture capital activities initiated by IDBI (Pandey, 1996).

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In March 1987, IDBI introduced venture capital fund scheme for financing ventures
seeking development of indigenous technologies/adaptation of foreign technology to
wider domestic application. Similarly, ICICI in association with UTI formed a venture
capital subsidiary Technology Development and Information Company of India (TDICI)
for financing technology oriented innovative companies. In mid 80’s all the three Indian
financial institutions viz IDBI, ICICI, IFCI started investing into the equity of small
technological companies (Nagayya, 2005).

In November 1988, GOI decided to institutionalise venture capital industry and

formulated first comprehensive guidelines governing the venture capital funds.
Controller of Capital Issues (CCI) implemented these guidelines known as CCI for VC.
These guidelines were very restrictive and following a very narrow definition of VC
(Varshney, 2006). Even under these guidelines, only national level financial institutions
and scheduled commercial banks were allowed to set up VC funds (Ramesh and Gupta,
2005). An advisory committee led by Dr. Ashok Lahiri in its report on ‘Technology
Innovation and Venture Capital’ reported that internationally, the trend favoured venture
capital being set up by professionals, successful entrepreneurs and sophisticated
investors willing to take high risk in the expectation of high returns. Further, these
guidelines required venture capital to be invested in companies based on innovative
technologies started by first generation entrepreneur (Verma, 1997). This made VC
investments highly risky and unattractive.

During this period (in 1989) World Bank organized a VC awareness seminar and
selected 6 institutions TDICICI (ICICI), GVFL, Canbank Venture Capital Fund, APIDC,
RCTC (now known as IFCI Venture Capital Funds) and ILF (now known as Pathfinder);
to start VC investment in India (Varshney, 2006). World Bank provided initial funding
of US $45 million for starting VC funds in the country.

Subsequent to the liberalization of the economy, the office of CCI was abolished in May
1992 and the powers were vested in Securities and Exchange Board of India (SEBI); the
regulatory body for venture capital funds. This was done in year 1996, through a
government notification (Bowonder and Mani, 2002). The formalization of the Indian
venture capital community began in 1993 with the formation of the Indian Venture
Capital Association (IVCA) headquartered in Bangalore, by some domestic venture
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capital funds. IVCA followed up for streamlining the guidelines for venture capital in the
country. Thereafter, the GOI issued guidelines in year 1995 for overseas venture capital
investments in India (Report of K.B.Chandrashekhar Committee on Venture Capital,
2000). Following this many foreign VC private equity firms entered India which
resulted in an increased availability of foreign funds for investments in India.

The series of activities, as discussed above, towards the formalization of venture capital
industry, can be viewed in terms of two remarkable phases i.e. the first phase from 1986
to 1995 and the second phase from year 1995 to 1999. In first phase, the major
development was World Bank’s interest that induced GOI to institutionalise the structure
for VC industry. During the second phase foreign investors started making investments
in the VC firms in India. The same coincided with the IT boom, which gave a major
thrust to the take off the VC industry in India (Dossani and Kenny, 2001).

The growth story thereafter of the VC industry has been discussed in the following
section. The reported data may be biased towards larger deals. This may be due to
reasons like; (i) availability of consolidated data on venture capital investment in India is
meager. The main source of information is in the form of highly aggregated statistics
produced annually by IVCA and other research agencies like VentureIntelligence, (ii)
amall venture capital firms which are not the members of this association are excluded
for the purpose of reporting the data and (iii) separation between VC and PE investment
in India has become very blurred. These terminologies are infact used interchangeably.

Private equity investors may be considered as growth capital providers as against the
VCs; the providers of early stage capital for analyzing the investment trends in India.
Here, the study considers the combined investments made by these two groups over a
period of time and makes the use of information as published by certain standard
research agencies such as Venture Intelligence.

5.2 Growth of Venture Capital/Private Equity in India

India’s growth in terms of VC/PE investments has been significant over the past several
years. The flow of risk capital in India has increased substantially since year 2000. Table
5.0 provides the picture of private equity operations in the country.

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 Table 5.0 Phases of Growth of Indian Risk Capital
Phase I Phase II Phase III Phase IV
Particulars Pre-1995 1995-1997 1998-2001 2002-2005
Total funds (US$ mn) 30 125 2847 5239
Number of funds 8 20 50 75
Early Stage
Seed, Early and
Stage and Development
Development Development- Telecom and Growth/Maturity
Primary stages and sectors Diversified Diversified IT Diversified
World Bank, Overseas Overseas
Primary sources of funds Government Government Institutional Institutional
Seed/early-stage
(US$ mn) 5 15 657 250
Number of transactions 10 20 273 58
Development (US$ mn) 25 110 2186.1 3107
Number of transactions 20 45 273 288
Growth/Maturity (US$ mn) 21.9 1882
Number of transactions 2 100
Total number of transactions 20 65 548 446
Average investment (US$ mn) 1 2 5.2 11.75
(Source: Report of the committee on Technology Innovation and Venture Capital (2006), based on
TSJ Media, IVCA Publications, Retrieved from www.
planningcommission.gov.in/reports/genrep/rep_vcr.pdf, accessed as on January, 2009)

Table 5.0 shows that the supply of finance took off after year 1997. But there is a sharp
drop in early stage financing after the end of the internet boom (1998-2001) (Dossani
and Desai, 2006) and the bulk of the money was invested into late stage development
(Report of the committee on Technology Innovation and Venture Capital, 2006). In the
year 2000, at the height of the internet boom, fund raising activity in the US touched its
peak. When the dotcom bust happened in 2001, and was followed by events such as 9/11
and the US economic slowdown, fund raising activity declined dramatically. India felt
the ripple effects of the Internet bust harder, since more than 90 per cent of the country’s
private equity money came from the US (Sengupta, 2006).

Consequently, during year 2001-2003, these investors started investing in more mature
companies in an effort to minimize the risks. The average deal size more than doubled
from $4.14 million in year 2000 to $8.52 million in year 2001, while number of early-
stage deals fell sharply from 142 in year 2000 to 36 in year 2001. Late-stage deals and
Private Investments in Public Equity (PIPEs) declined from 138 in year 2000 to 74 in

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year 2001, and investments in internet-related companies fell from $576 million in year
2000 to $49 million in year 2001. This decline broadly continued until year 2003
(Aggarwal, 2006). By early year 2004, fundraising in the US, which accounts for more
than 60 per cent of the world’s private equity market, had begun to stabilize. The ripple
effects were soon felt in other parts of the world, including emerging markets like China
and India (Sengupta, 2006).

As shown in Figure 5.0, the number of deals and the total dollars invested in India has
been increasing substantially. The VC investment continuously increased till the year
2001 and then drastically reduced upto year 2003. Due to high growth prospects of
Indian economy and largely soaring stock markets, investors renewed their interest and
started investing again in year 2004. It is evident from the figure 5.0 that US $1650
million in investments were made in year 2004 surpassing the $1160 million in 2000 by
almost 42%. These investments reached US $2200 million in year 2005. Venture capital
finally made a come back in India after 2005. During the year 2006 and 2007, there was
a substantial growth of almost 241% and 89% respectively in value of investment. In
absolute terms, the number of deals and the value of the investments were just 280 and
$1160 million in year 2000, which increased to 387 and $14234 million in year 2007,
respectively.

450 16000

400 38714234
No. of Deals 14000
Value (in US$ million)
Value of Deals (In US$ Million)

350
12000
299
300 280
10000
NO. of Deals

250
8000
7500
200
146 142 6000
150
110
4000
100 78 71
56
2200 2000
50 1650
1160 937 815
591 470
0 0
2001 2002 2003 2004 2005 2006 2007 2008 2009
Year

Figure 5.0 Total Number and Value of VC and PE Investments

(Source: Selvakumar and Kethraj (2009), Venture Capital for Startups”, Facts for you, 29(5), 29-32)

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In the year 2008, the development of the VC market was adversely affected due to
American sub-prime mortgage crisis. As per Venture Intelligence’s estimates,
investments during 2008 were at $815 million in 142 deals. American venture capital
investments globally halved in the March quarter of 2009, dripping to a five year low of
$1.87bn, while in India it was down by 29% (The Economic Times, Ahmedabad, 8th
May, 2009, pp 5). It was a challenging time for VCs as liquidity markets were virtually
shut down in the face of economic crises and cash strapped limited partners were
reluctant to back new venture funds without substantial returns (Retrieved from
http://fis.dowjones.com/VS/1Q09GlobalVC.html, accessed as on January, 2010).

The markdown in valuations and slow growth of equity market throughout year 2008 as
well as in the beginning of year 2009 has raised serious consideration for Indian VC/PE
industry. With companies scaling back their expansion plans and the earnings outlook for
quite a few companies turning uncertain; VC/PE players have raised their shareholdings
in the listed companies where they already hold a stake-through open market purchases,
rather than pumping money directly into new companies (Vasudevan and Zachariah,
2009).

Of course, the future is difficult to predict because private equity investments are based
on a complex combination of macroeconomic, microeconomic, and financial policy-
related factors, which affect the rational and emotional sentiments of the investor
community. Yet, the overall outlook for VC/PE investments in India seems to be quite
promising. Despite the interim ups and downs, the VC/PE industry has made a
significant progress over time. PE flows have been driven by the continuous allocation of
risk capital from developed to developing economies such as India (Mukhrerjee, 2007).

5.3 VC/PE Investments by Stages

Historically, venture capital evolved as a method of early stage financing, but the notion
of venture capital also recognizes different stages of financing. It includes development,
expansion and buyout financing for the enterprises (Pandey, 1996). The detailed
distribution of the VC/PE investment by various stages is presented in the table 5.1(a)
and 5.1 (b).

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 Table 5.1 (a) Value of Deals (in US $ mn) based on Type of Investment
Year 2000 2001 2002 2003 2004 2005
Early and mid stage venture capital 342 78 81 48 150 103
Late stage and PIPEs 819 859 510 422 1500 2097
(Source: Aggarwal (2006), “Is the Venture capital market in India getting overheated?”, based on
Evalueserve, IVCA and Venture Intelligence India, Retrieved from http://www.venturewoods.org/wp-
content/uploads/2007/10/evs-article-indian-pe-market-sept-21-2007-version-5.doc, accessed as on May,
2009)

Table 5.1 (b) Value of Deals (in US $ mn) based on Type of Investment for Year
2006 and First half of 2007
2006 2007 (First Half)
No. of Deals Deal Value No. of Deals Deal Value
Stage (US$ mn) (US$ mn)
Early stage 59 236 24 154
Growth stage 42 393 25 1082
Late stage 104 3663 67 2162
PIPE 61 1314 34 1714
Buyout 11 1125 6 440
Others 22 769 6 47
Total 299 7500 162 5599
(Source: Selvakumar and Kethraj (2009) Venture Capital for Startups”, Facts for you, 29(5), 29-32
and IVCA presentation October, 2007, Retrieved from www.scribd.com/doc/24540285/IVCA-
Presentation-October-2007, accessed as on December, 2009)

Looking at the stage-wise distribution of VC investments in terms of number of deals

and their value, it may be concluded that that Indian VC market is basically dominated
by growth stage, late stage, PIPE and buyout deals as opposed to early stage basically
seed and startup funding. This is particularly true during last three years (2004-2006). A
significant chunk of total VC investments are going to late stage funding. Early stage
investments have been declining continuously during 2001-2003 and have essentially
remained negligible during year 2004-2006.

It is essential at this juncture to discuss briefly about PIPES, as they constitute nearly
30% of deal flow (average of no. of deals in PIPEs for the year 2004, 2005 and 2006). To
elaborate the term, in a PIPE transaction, investors buy securities directly from a publicly
traded company through a private placement. Typically, such transactions are done by
secondary market investors like financial institutions, mutual funds and the like. In the
US, the incidence of PIPE deals is very less. This is due to the fact that a company would
typically need to strike $200-300 million in revenues before listing. In India, the sum
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required is $30-40 mn. Therefore, in India a lot of small companies are listed but they are
like private companies (Adilakshmi and Jampala, 2007).

Despite the attractive returns in seed stage investing, VCs continue to invest in
companies with reduced development risk. As per the research of Artemis investment
team, based upon the historical data of venture capital returns over 20 years, suggests
that seed stage investing consistently outperforms every asset class, including a balanced
portfolio, later stage investing, buyout, mezzanine and all private equity (Wong, 2001).

A few reasons may be attributed to this trend of investing in late stage deals such as (i)
lack of deal flow after the collapse of internet bubble (Report of the committee on
Technology Innovation and Venture Capital, 2006). (ii) less risk in the company and
potentially less time to harvest, by investing at later stages, (Bradley et al., 2002). (iii) an
ever increasing trend in the venture capital fund raising larger and larger funds which
preclude them from investing in seed stage companies (Wong, 2001). (iii) fixed costs of
project screening and monitoring make it uneconomical for venture capitalists to make
small investments. Venture capitalists are hesitant to pursue small opportunities where
even high-percentage returns will not cover their investment overhead (Bhide, 1992). (iv)
seed stage companies require more hands-on help. Given that the number of board seats
for partners in large funds are in the double digits these days, this leaves little time for
them to allocate to the development of companies at the seed stage. In this sense, many
of the investment professionals have transitioned from being company builders to
portfolio managers (Wong, 2001). In fact, this vacuum created by VCs at seed and stage
has created huge opportunity for investors like angels and incubators.

5.4 PE/VC Investments by Industry/Sectors

VC/PE funds invest in certain focused areas depending upon their perception of market
growth on one hand and the technical expertise on the other hand (Taneja, 2002). To
limit risk and to identify potentially profitable firms, VCs typically concentrate their
holdings in specific industries, building relationships and networks that also harvest
future opportunities (Dolvin, 2005). Although there is always a risk in focusing on a few
industries, many VCFs are reluctant to diversify their investments into the industries with
which they are not familiar or those which take longer to yield profits (Pandey and Jang,
1996).
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However, there are few exceptions to this. There are VCs in India who rather limiting
themselves to certain industries, keep their options open and invest in good business
opportunities. The distribution of venture capital investments by sectors/industries is
shown in the table 5.2.

Table 5.2 PE Investment by Sectors/Industries (Figures in %)

Sectors/Industry 2003 2004 2005 2006 2007
IT and ITES 49 59 19 24 8
Manufacturing 2 9 17 12 5
Healthcare and Life science 7 6 12 7 4
BFSI 12 3 14 12 33
Others 30 23 38 46 50
(Source: Aggarwal, 2006; IVCA presentation October, 2007; Venture Intelligence India Round Up
Annual, 2005; Selvakumar and Kethraj, 2009)

As can be seen from table 5.2, till the year 2004, IT and ITES continued to account for a
majority of investments and there by retaining its status as the favorite industry among
VCs and PE investors. A very important feature of the resurgence in the VC/PE activity
in India since year 2004 has been that these investors are no longer focusing only on the
IT and the ITES. Even though IT and ITES sectors account for major share in PE
investment over the years, the proportion of non-IT investments both by activity and
value climbed gradually after year 2004. The sectors like manufacturing, engineering,
banking and finance have experienced intense PE activity. This may be due to the fact
that the growth in the Indian economy is no longer limited to the IT sector but is now
spreading more evenly to sectors such as bio-technology and pharmaceuticals; healthcare
and medical tourism; auto-components; travel and tourism; retail; textiles; real estate and
infrastructure; entertainment and media; and gems and jewellery (Aggarwal, 2006).

5.5 PE/VC Investments by Regions

Venture capital financing is clustered in few regions depending on various favourable

environmental factors such as political, financial and technological (Mason, 2007). In
US, the venture capital industry is clustered in Silicon Valley, New York, and Boston.
Silicon Valley and Boston can be termed “technology-related” venture capital clusters,
while New York is a “finance-related” cluster (Dossani and Kenney, 2001). In India,
there exist all three types of clustering. Concentrations of venture capital firms exist in
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Bombay (finance-related cluster), New Delhi (political related cluster), and Bangalore
(technology-related cluster) (Subhash, 2007).

There are practical reasons for emergence of these cities as specific clusters. Mumbai is
the financial capital of India, with two largest Indian stock markets; BSE and NSE and
head offices of RBI and SEBI. Almost all major banks have their headquarters in this
city (Thomas, 2007). Many VC firms located here are linked to, or are offshoots from,
other financial institutions, such as banks and investment houses. The stock exchanges
(BSE and NSE) facilitate the exit mechanism from venture capital investments via IPOs.
Besides, location of VC firm in the financial centre offers the access to the pool of
knowledge and expertise and provides proximity to other financiers, entrepreneurs, legal,
accounting and consulting firms (Mason, 2007).

The southern states in India have developed a strong reputation as a source of software
development services, with Bangalore as particular. Apart from IT majors like Infosys,
Wipro, Tata Consultancy Services and Microland, the world’s leading IT companies like
GE, Texas Instruments, CISCO, Digital, IBM, HP, Compaq, Motorola, Lucent
Technologies, Microsoft, Sun Micro Systems, Oracle, Novell and several others have
made Bangalore their home. Several educational institutes and research centres are
located in Bangalore and contributed to the development of the city as an IT centre (Dijk,
2003).

Delhi, a special union territory, may be considered as the best place for VC investment
because of the location of the political capital. Today, Delhi is a major cultural, political,
and commercial center of India. Being closer to the political capital makes the flow of
activities connected with VC financing much easier.

Table 5.3 Top Cities Attracting PE Investments

2005 2006 2007

Number Number Deal Number Deal

of Deal Value of Value of Value
Cities Deals (US$ mn) Deals (US$ mn) Deals (US$ mn)
Mumbai 38 697 69 1780 109 5995
Delhi/NCR 25 321 41 395 63 2668
Bangalore 19 195 40 1525 49 685
(Contd.)
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 Cities 2005 2006 2007 Cities 2005 2006
Number Number Deal Number Deal
of Deal Value of Value of Value
Deals (US$ mn) Deals (US$ mn) Deals (US$ mn)
Hyderabad 14 168 17 492 41 1380
Chennai 16 328 22 354 32 824
Pune 9 91 10 1114 NA NA
Ahmedabad NA NA NA NA 14 492
Kolkata NA NA NA NA 12 339
(Source: IVCA presentation October, 2007; Venture Intelligence India Round Up Annual, 2005;
Selvakumar and Kethraj, 2009)

The distribution of venture capital investments across different cities suggest that VCs in
India prefer local investing as majority of the investments have been captured by
Mumbai followed by Delhi and other cities mainly Bangalore, Hyderabad and Chennai.
It means that these investors favour businesses that are located close to where the VCs,
are located.

The VC investment outcomes show clear evidence of spatial proximity effects i.e.
investment is disproportionately concentrated in those regions that also contain the major
clusters of venture capital firms. This supports the fact that venture capital investment is
very much a relational form of investment with hands-on approach, with regular visits to
meet with management in the client firms to oversee firm performance (Mason and
Harrison, 1992).

5.6 Regulation of Venture Capital Industry in India

As mentioned before, in the absence of any organized venture capital Industry in India,
in earlier years, certain development financial institutions and high networth individuals
played the role of venture capitalists. Later, based on study by World Bank to examine
the possibility of developing venture capital in the private sector, GOI announced
guidelines for venture capital funds in 1988 which were highly restrictive in nature
(Report of K.B.Chandrashekhar Committee on Venture Capital, 2000). The requisite
powers under the guidelines were vested with CCI which were later vested with SEBI
(Verma, 1997).

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 Thereafter, GOI issued guidelines in September 1995 for overseas venture capital
investments in India. While, for tax exemption purposes, guidelines have been issued by
the Central Board of Direct Taxes (CBDT), the investments and flow of foreign currency
into and out of India have been governed by the Reserve Bank of India (RBI). Further, as
a part of its mandate to regulate and to develop the Indian securities markets, SEBI under
Section 12 of SEBI Act 1992 framed SEBI (Venture Capital Funds) Regulations, 1996
(Report of K.B.Chandrashekhar Committee on Venture Capital, 2000). At present, the
venture capital activity in India comes under the purview of different sets of regulations.
There are three sets of regulations dealing with venture capital activity i.e. SEBI
(Venture Capital Regulations) 1996, Guidelines for Overseas Venture Capital
Investments issued by Department of Economic Affairs in the Ministry of Finance, year
1995, and CBDT Guidelines for Venture Capital Companies issued in 1995, which were
later modified in 1999 (Taneja, 2002).

Based on recommendations of the K.B. Chandrasekhar Committee, which was set up by

SEBI during the year 1999-2000, guidelines for overseas venture capital investment in
India were withdrawn by the Government in September 2000, and SEBI was made the
nodal regulator for VCFs to provide a uniform, hassle free, single window regulatory
framework (Gandhi, 2008). Basically, venture funds in India may be classified on the
basis of the type of promoters into the following four groups. (Chary, 2005; Pandey,
1996; Kumar, 2005)

TYPES OF VENTURE CAPITAL FUND

All India State Finance Private venture capital

Developmental Corporations funds promoted by
Financial Institutions sponsored venture foreign banks or private
sponsored venture capital funds Bank sponsored sector companies and
capital funds promoted by state venture capital financial institutions
promoted by Central level developmental funds (eg. VCFs by Nexus
Government financial institutions (eg. VCFs by SBI, India, UTI Ventures,
controlled (eg. VCFs by Canara Bank, etc.) Kotak Private Equity,
development financial Andhrapradesh Auroes Capital, Axis
institutions state finance holding, Bluerun,
(eg. VCFs by ICICI, corporation and Clearstone Ventures
IDBI and IFCI etc.) GVFL etc.) etc.)

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Further, there is a self regulation for the VC industry by Indian Venture Capital
Association (IVCA) (Varshney, 2006). Indian Venture Capital Association (IVCA) is a
self regulatory body of the venture capitalists in India established in 1993 and is based in
Delhi. IVCA members comprise venture capital firms, institutional investors, banks,
incubators, angel groups, corporate advisors, accountants, lawyers, government bodies,
academic institutions and other service providers to the venture capital and private equity
industry. Members represent most of the active venture capital and private equity firms
in India. The IVCA promotes sound public policy on issues related to tax, regulation and
securities through representation to the Securities and Exchange Board of India (SEBI),
Ministry of Finance (MoF), Reserve Bank of India (RBI) and other Government
departments. IVCA also provides vital statistics related to VC and PE industry through
annual survey of private equity and venture capital managers and their investee
companies.

5.7 Conclusion

Indian economy is on ever-increasing growth curve despite problems related to downturn

in global economy. As stated in the previous chapter, the developed countries are
investing in the emerging Asia-Pacific countries and India is one of them attracting large
amount of foreign venture capital investment. India tends to be a leading destination for
VC/PE with positive indicators such as consistent GDP growth, a buoyant capital
market, strong industrial growth, sound financials of Indian corporates and favourable
demographic forces. The chapter reviews the evolution and growth of venture capital
industry in India. The VC investments in India continuously increased till the year 2001.
Following the internet crash worldover, the investment activity drastically reduced upto
year 2003. However, due to high growth prospects of Indian economy, investors again
made a comeback in year 2004. Thereafter, apart from few fluctuations, VC investment
activity has maintained its momentum in the country. These investments are majory
concentrated in to IT and ITES sector. Nonetheless, these investors are diversifying into
other areas such as biotechnology, retailing, lifescience and service sectors due to better
prospects in these sectors. Moreover, VC investments in India are substantially
concentrated in cities such as Mumbai and Bangalore due to financial and technological
clustering respectively in these cities. As the thesis is focused upon Gujarat, ecosystem
for development of venture capital in the state is discussed in the following chapter.
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