"These are new areas of financing that will emerge as niche markets over the next five years, and we are interested in addressing the various financial needs of entities seeking funds for expansion beyond start-up level," IDEA managing director Sanjaya Kulkarni told The Financial Express on Wednesday.

These distinct funds could be mergers and acquisitions fund, turnaround/ restructuring fund and those for supporting professional managers in their endeavour to takeover management control of sick companies as part of rehabilitation package, he said. Till now these kind of funds were there only in developed nations.

IDEA, which has announced launch of its second India-focussed venture capital fund, eTec Ventures LLC, has already shortlisted four projects for funding to the tune of Rs 50 crore ($12 million). This fund, based in Mauritius and to invest in new and existing technology, entertainment and communication ventures, was launched in association with the US-based International Equity Partners (IEP). The fund has a corpus of $26 million and IDEA serves as IEP's local advisor in India.

One of these companies proposes to set up an e-broking network in brick and click (both virtual and physical) model, while a Chennai-based company involved in providing back-end services, such as layout and placement of content including that of engineering and science with pictures for global publishing giants, he said. The others were a call centre project and a US-based NRI promoted company which launched a product for skill management in human resources management function. The decision of specifics of investments in these projects was yet to be taken, he added.

"The fund was located in Mauritius so that it could invest in any country in the world with ease and avoid hassles associated with plethora of clearances required at every state of investment outside the country, if located in India," Mr Kulkarni said.

Referring to the recent decision of the finance ministry to impose one year lock-in period on shares existing prior to initial public offer from the date of such issue, which was also made applicable to venture funds, Mr Kulkarni said it would only distance new investors, and create problems for those who have invested before the new norms were brought in.

The sudden decision, made applicable with retrospective effect, would affect investors, including non-resident Indians and high networth individuals, who have invested in many start-ups in the form of venture funding, he added.