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  Venture Capitalists Plan to Flex their Muscles in the RE Sector...

  After floating niche funds for technology, real estate and infrastructure, venture capital (VC) funds in the country are now flexing their muscle in the renewable energy terrain,

  and evaluating exclusive funds for green technology.

According to Dow Jones Venture Source report, venture capitalists invested $928 million in 80 deals in India in 2007. Only a small fraction of the funds however reached the clean energy sector. Notable investments include UTI Ventures’ investment of $8 million in Pesco Beam Environmental Solutions, a company involved in waste-oil recycling and alternate energy systems; and IDFC Private Equity’s investment of Rs 35 crore in Ahmedabad-based Doshion, a water management firm.

Year 2008 is however likely to be different. Industry analysts predict that at least a few small green-technology funds, with fund sizes ranging from $20 million to $100 million, are likely to come together this year. Some of the most promising research in renewable energy is in wind generation and solar thermal.

Both Lightspeed Venture Partners and IDG Ventures are interested in investing in renewable energy or green technology companies. Kleiner Perkins Caufield and Byers or KPCB, the venture capital firm that has backed companies such as Amazon.com, Google Inc. and Sun Microsystems Inc., too wants to actively invest in clean-technology companies in India. Canaan Partners had also earlier shown interest in investing in green technology companies.

Some other prominent tech-specific funds are Helion Venture Partners, NEA-IndoUS Venture and Intel Capital. Infrastructure-specific funds include 3i Group, and state-run India Infrastructure Finance may also become active in the clean energy terrain.

So is VC-funding going to be the next-big-thing in RE financing?

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