Dwelling on the investment scenario in the country, Mr Sethi said that about 3000 new IT companies were started last year of which "very few" had availed of funding. The average seed funding for these companies has been Rs 5 million and is likely to grow to about Rs 7.5 million in the next year."This level of funding is highly undercapitalised and there is no expertise attached to the capital, we see a gap and opportunity here" said Mr Sethi.

Moving to the first round funding scenario, Mr Sethi remarked that over $5 billion of funds (over 60 companies) been announced with intention of investment in India of which about 25 were launched last year. "We believe that at this stage a company needs to be capitalised at about $30 million, which again is not happening in most cases and the undercapitalisation is due to several factors" says Mr Sethi. He added that he was bearish on generic horizontals but bullish on verticals in entertainment, healthcare, embedded applications, telecom and wireless.

"GIS is also a huge opportunity in our opinion", added Mr Sethi. On B2B spaces, Mr Sethi said that the application is likely to succeed only with industry backing and again only if India has a global presence in the particular sector.

Also addressing the session, Dr Sridhar Mitta, MD, e4e Labs, said that companies who had moved up the value chain from being software services providers to infrastructure outsourcing, like Exodus were really "liked by investors" since customers tend to grow with these companies and these companies leverage software skills.

"I anticipate that the market for outsourced Infrastructure services is worth hundreds of billions of dollars and certainly a much much bigger market than the market software services" concluded Mr Mitta.

Westbridge Capital in India soon
Referring to new funds which are in the process of starting operations in India, Mr Sudhir Sethi made a mention of Westbridge Capital, a fund managed by Mr Raj Duggar, formerly from Goldman Sachs. The fund with a corpus of about $100 million is about to begin operations in India.

Mr Sethi also mentioned that Chrysalis Capital was in the process of raising its second fund for India.