IDG Ventures India said it will invest up to Rs 100 crore in start-ups that are a part of Microsoft India's BizSpark programme.
Microsoft BizSpark, started in December 2008, provides start-ups with software, support and visibility during the first three years with no upfront costs.
As part of the Early Stage Funding Program, IDG Ventures will invest up to Rs 25 crore each in companies that are under three years old, and whose annual revenue are less than Rs 5 crore. Companies that are part of the BizSpark programme will be asked to send their business plan to IDG for evaluation.
"In the current economic scenario, lack of adequate funding is likely to be a key barrier to success of young technology companies. We are keen to demonstrate our commitment to the start-up community by offering financial resources," said Mr Sudhir Sethi, Chairman and Managing Director, IDG Ventures.
India has about 800 start-ups, compared with 24,000 in the Silicon Valley, said Mr Rajan Anandan, Managing Director, Microsoft India. There are many companies that work on Web 2.0 application, mobile-based applications and software. The large and sophisticated domestic industries could be a huge incentive for start-ups as they could be potential customers, he added.
Mr Sethi said IDG had evaluated about 700 companies last year and the number could go up to 1,000 this year.
He said the interest in smaller cities is great, and these markets are expected to come up quickly. The partnership with Microsoft would give IDG access to a larger number of companies even in tier-II and III towns, he added.
IDG is interested in certain sectors, including business intelligence and analytics, security, mobile-based applications, defence, aero-space and avionics, products, energy and telecom. "In times such as these, the bar becomes significantly higher and we are much more careful than we were before," Mr Sethi added.