An association of venture capital companies, Indian Venture Capital Association (IVCA) has been formed to co-ordinate the activities of venture capital financing in India. The association had 21 members in 1998 and it has currently risen to 26 members.

IVCA members function under different categories.

• As companies involved in investment and fund management

• As companies which set up funds and manage assets.

• As companies which manage domestic funds, offshore funds, and sometimes both.

Many state governments have already set up venture capital funds for the IT sector in partnership with local state financial institutions and SIDBI. These include Andhra Pradesh, Karnataka, Delhi, Kerala and Tamil Nadu.

An innovative proposal that provides significant scope for linkage between venture capital and technology-based projects is the concept of technology park. The objective is to encourage technological research, to foster transfer of such contents to small and medium undertakings and to stimulate the creation of new companies. Venture capital companies are usually housed in the technology park so that they can closely screen the ventures they are funding. Italy and the UK have been successful in setting up such technology parks. In Italy an Area Science Park was established in 1992 and following this an Environ Science Park was set up in 1996. A quick look at the UK models indicate that they have established three parks, viz., Cambridge Science Park in 1970, Manchester Science Park in 1984 and Oxford Science Park in 1991.

In India, it is commendable that under inspiration from Shri Narasimham, Shri Vaghul, Dr. Ganguly and others, ICICI has decided to establish a Knowledge Park in Andhra Pradesh with active support from the Chief Minister of Andhra Pradesh. The objective is to formally put in place a network to facilitate research in biotechnology, drug development, health care, information technology, environment and energy protection technology and advance material science. I understand that ICICI will initially invest Rs.25 crore in common infrastructure.

ICICI Experience:

The number of VC's in India have crossed fifty. Among them ICICI is the leading VC with $400 million. Starting with the objective of playing the role of a value added investors with a high technology focus ICICI in 1997-98, ICICI made 10 investments worth Rs 50 crore and it further increased to 37 with an investment of Rs 277 crore during 1999-2000.The momentum continued in next period also i.e. from April 2000 to September 2000, 35 investments were made with RS 290 crores. ICICI has set a record not only in making investments but also in exiting from the companies which made them so successful. Exit management differentiates ICICI ventures from other VC's. It is probably the only company in India which has exited from over 100 companies, while most of them are only in the investment phase .According to AJV Jayachander the MD and CEO of ICICI ventures-Deal sourcing, due diligence and value addition are other key factors for our success, and what we lost in the old economy, we cannot afford to lose it in the new economy. The knowledge industry in India has flourished because of fewer regulations. Both the government and SEBI acted as catalysts. Speaking on the Dotcom issue he said "Our exposure to dotcom is minimal, today dotcoms are down and it is a phenomenon in any new industry and to overcome this dotcoms should tie up with some strong offline player.

Venture funds have been an engine for economic growth for over a decade in countries like USA, Isreal, Taiwan. The situation is now ripe to be replicated in India. To foster innovation, new ventures have to work in a competitive & supportive environment which also needs financial backing from venture capitalists(VCs) and angel investors who will provide the venture not just with funds, but also with strategic management support.