VC Funding | A booster shot for health
For investors, this sector is considered a good alternative to the usual IT/BPO start-ups—it’s recession-free and is expected to grow fourfold in the next 10 years. For now, the bulk of the money is going to the infrastructure end of the business.
It is a segment that is still considered to be in its infancy, but that has not deterred investors who poured close to $100 million (around Rs400 crore) into health care firms through 2007, up from $41 million in 2006.
Venture capitalists (VCs) invested a total of $928 million in entrepreneurial companies in India during 2007, according to the India Venture Capital Report, published by Dow Jones VentureSource. Companies in the health care sector accounted for more than one-tenth of this investment.
This year, the country’s oldest and largest private equity firm, ICICI Venture Fund Management Co. Ltd, is upping the ante. It has launched a new firm, Iven Medicare, that will lead all investments in this sector. To begin with, the firm has finalized four deals totalling close to $70 million, with three more deals in the pipeline.
It is not just health infrastructure, such as hospitals and diagnostic laboratories, that is attracting investor attention. Start-ups focused on rural health care, online medical services, design and manufacture of medical devices and specialized services such as telemedicine and teleradiology are also raising equity capital.
In March, Vaatsalya Healthcare, a start-up that aims to establish a network of 20-bed hospitals across semi-urban and rural areas of Karnataka, raised $1.5 million in equity from investors who focus on early-stage firms.
Perfint Healthcare Devices Pvt Ltd, a two-year-old start-up with operations in Chennai and Mysore, raised $3 million from IDG Ventures India in December. It was the second round of investment for the start-up that manufactures image-guided medical devices—the company had earlier raised seed investment of $500,000 from early- stage venture fund Erasmic Ventures.
Also in the fray are specialized health care providers such as Neurosynaptic Communications which, in collaboration with the Indian Institute of Technology, Madras, has developed a range of medical diagnostic equipment and solutions, having raised seed funding from the Ventureast TeNet fund as well as APIDC Biotech Fund.
“Raising funds earlier has not really been easy, but we are fortunate to now have investors who understand early- stage companies and the rural health care market,” says Sameer Sawarkar, chief executive officer of Neurosynaptic Communications, who aims to raise further capital later this year to roll out the company’s branded telemedicine services to 17 districts countrywide.
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