In a trend that started two years ago, South Asian entrepreneurs saw a continual drop in venture capital fundraising, raising just $604.6 million in 2009, down from $1.54 billion in 2008. However, the downward spiral seems to have hit bottom and be on the road to some recovery in 2010, with $378.7 million raised in the first six months of 2010 — meaning South Asian entrepreneurs are already 63 percent of the way to 2009's miserable VC total with half the year to go.

The numbers are part of a recently released survey of venture capital raised by U.S.-based, South-Asian run companies completed by the IndUS Business Journal.

The 2009 total of $604.6 million in venture capital raised was a 60 percent drop in funding from the previous year, which reflects the largest year-to-year decrease since the newspaper started its venture capital survey in 2002. The amount of money raised by South Asian entrepreneurs in the United States had increased every year until 2008 when it dropped 34 percent from the 2007 high of $2.07 billion. Last year's funding is also the first time South Asian-run companies have collected less than $1 billion in VC funding since 2002.

In 2009, 49 South Asian-run companies raised venture capital, also down from the 87 companies that raised money in 2008.

Alarm bells have certainly been ringing in the venture capital arena for some time now and the South Asian-specific numbers are mostly reflective of the overall venture capital statistics. According to Dow Jones VentureSource, which is published by News Corp. subsidiary Dow Jones & Co., the total venture capital funding raised by U.S. companies in 2009 dropped 31 percent from the previous year. U.S. companies raised $21.4 billion in 2009, down from $31 billion raised in 2008.

South Asian-run companies raised 2.8 percent of the total venture capital raised by U.S. companies in 2009, down from 2008 when they raised 5 percent of the total VC.

One area in which South Asian-run entrepreneurs continue to buck the national venture capital trends is in average deal size. The average deal size for South Asian-run companies last year was $13.4 million, according to the IndUS Business Journal survey, compared to an average deal size of $4.7 million for all U.S. companies, as reported by Dow Jones VentureSource. Specifically, for South Asian-run companies the 2009 average deal size is down from the $17.78 million average deal size in 2008.

According to the IndUS Business Journal, the dollar amounts and number of deals reported in the newspaper's venture capital survey are conservative because some companies did not respond to inquires or do not release investment numbers.

The top South Asian venture capital recipients in the 2009 survey include: Teoco Corp of Fairfax, Va., with $60 million; Chegg.com of Santa Clara, Calif., with $57 million; Cempra Pharmaceuticals Inc. of Chapel Hill, N.C., with $46 million; Synageva BioPharma Corp. with $45 million; and Deeya Energy Inc. of Fremont, Calif., with $30 million.

Head of last year's VC class Teoco Corp., founded by Atul Jain, is a maker of billing software for telecommunications providers. Jain runs the company as chairman and CEO. Its lead investor is TA Associates.

California has long been a bastion of venture capital fundraising for South Asian-run companies and 2009 was no different with 31 companies raising $313.5 million.

Despite the unimpressive numbers for South Asian entrepreneurs in 2009, the first six months of 2010 are more promising. South Asian-run companies raised $378.7 million in venture capital so far in 2009, according to an IndUS Business Journal survey.

This number tops the $292 million raised by South Asian-run companies in the first six months of 2008. Overall venture capital fundraising by U.S. companies has also shown an increase, jumping up 12 percent to start 2009 versus the same period in 2008, according to Dow Jones VentureSource.

South Asian entrepreneurs received the funding boost largely in part because of an average deal size of $14.6 million in the first six months of 2009. This number is up from the $11.6 million average deal size for South Asian-run companies in the first six months of 2008. It also dwarfs the average deal size of $4.5 million for venture capital raised by all U.S. companies, as reported by Dow Jones VentureSource for the first quarter of 2010.

The top South Asian venture capital recipients in the first half of 2010 include: Enphase Energy Inc. of Petaluma, Calif., with $63 million; Solexant Corp. of San Jose, Calif., with $41.5 million; CardioMEMS Inc. of Atlanta, with $37.9 million; Genetix Pharmaceuticals Inc. of Cambridge, Mass., with $35 million; and Tilera Corp. of San Jose, Calif., with $25 million.

Enphase Energy is a provider of solar energy management systems. The company was co-founded by Raghu Belur, who serves as its president. Enphase is backed by numerous investors including Kleiner Perkins Caufield & Byers, Third Point Ventures, Rockport Capital Partners, Madrone Capital Partners, PCG Asset Management, Applied Ventures and Bay Partners.