Businesses tracking India's increasingly visible consumption story are capturing the imagination of early stage entrepreneurs, closing in on the favourite technology sector, according to a study by  venture capital firm Helion Advisors. These entrepreneurs are increasingly using newer channels like conferences and referrals to meet potential investors.

The venture firm surveyed over 1500 business ideas it evaluated between 2006 and 2009 which said that 29% of business ideas came from the consumer services space, while 27% came from the Internet and mobile industry. The rest came from segments like IT services, product and enterprise software, BPO/KPO and others.

A composite group (which included energy, manufacturing, infrastructure, logistics and real estate) contributed to 17% of the total idea pool. While three-fourth of the proposals were for

pre-revenue or early-stage (0-2 years) funding, the rest were seeking mid-to-late stage funding.

"The survey busts the notion that technology and Internet / mobile businesses alone is driving entrepreneurial activity in the country. A higher number of entrepreneurs and from multiple sectors, reveal a more mature market, thus, helping investors with greater avenues to identify and engage with,” said Sanjeev Aggarwal, Managing Director, Helion Advisors.

Helion, which has $350 million under management, also gets every sixth idea from smaller cities and towns including Vadodara, Kochi, Vellore and Patna. More than 20% of the business ideas came from outside of the top ten cities.

Helion's managing director Kanwaljit Singh said that the ideas from these smaller cities have been increasing over the last couple of years. "When we started out we hardly saw anything from these cities," he said.

While Bangalore leads with 23% of the ideas, Mumbai and NCR contributed 18% and 16%, respectively. Hyderabad and Chennai contributed 5% each.

A majority of 70% of ideas came either directly or through informal forums like referrals and conferences as against approaching through investment bankers.

"A channel that is emerging as a fairly prominent and important is through referencing. A lot of companies are being started by senior corporate executives who reach out to us through some common contact. That is important for us since you start with a positive disposition," Singh said.

India's tech capital Bangalore is fast emerging as a major destination in consumption plays for entrepreneurs, according to the study. While 23% of the consumer ideas came from Mumbai, Bangalore was close at 20%. Consumer services included retail, healthcare, education, financial services, food, media and entertainment in the study.

Helion has backed several consumption plays based out of Bangalore like salon chain YLG and quick service restaurant (QSR) plays like Brand Calculus and most recently Mast Kalandar.

Also, newer themes are emerging now in consumption sector where Helion had initially earmarked areas like education, financial services and retail. "We are seeing of sectors like healthcare, where we have businesses trying to consolidate and niche retail plays coming up. In media also there is move towards convergence of traditional and new media. On the technology side, e-commerce is buzzing with emergence of group buying websites," Singh said.

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