IFC Support to India’s VenturEast Proactive Fund Will Help Early-Stage Businesses Become Leaders

IFC, a member of the World Bank Group, will invest in VenturEast Proactive Fund in India, which will support early-stage businesses that are building globally competitive technologies as well as mature sector businesses that will use technology to build leadership. An important approach of the fund will be to back businesses that help address the digital divide, helping technology reach more people at the “bottom of the pyramid” as well as serving the needs of small and medium enterprises.

IFC will play a key role through active participation in the fund’s governance structure. The investment will support the development of local private equity by helping a successful local private equity team grow and expand according to international norms and practices. IFC will also be involved in setting reporting standards at the fund.

The VenturEast Proactive Fund will invest in early-stage businesses that require funding of less than $3 million, but will invest subsequently up to $5 million. It will also invest in selected growth-stage companies that require funding or $5-10 million. IFC will invest up to $15 million in this $150 million fund. It is managed by VenturEast Fund Advisors.

“We believe that this fund will address a relatively underserved segment of the Indian market. To cite an example, only 7 percent of the funds raised in India in 2006 were targeted toward early-stage financing. Our dedicated focus on this space over the last decade puts us in a unique position to make such investments,” said Sarath Naru, Managing Partner of VenturEast.

Paolo M Martelli, Regional Director, IFC South Asia, said, “It is heartening for IFC to be able to support a venture capital fund manager that thinks differently. We have great confidence in this management team, who champion businesses and technologies that are truly relevant to India.”

Prior to this launch, VenturEast Fund Advisors raised five funds - two venture capital funds; two incubation funds; and a listed fund:

* APIDC VCF, a $9 million generalist fund launched in 1995, with support from the World Bank
* APIDC Biotech Fund in 2004, a $40 million fund focused on investments in biotechnology companies in India
* VenturEast Tenet I ($5 million) and VenturEast Tenet II ($18 million), incubation funds focusing on seed investments in India’s technology sector.

VenturEast has also sponsored a listed fund focused on life sciences, Trans-India Limited ($92 million).