'The confidence among foreign funds, be it venture capital or private equity, hasn't been restored after what happened back home.'

According to him, these funds will start returning to the equities markets first, and later look at other avenues.

Among start-ups, too, there is intense competition to get venture capital funding. And more often, there is one set of firms that comes up tops -- IT-based businesses or companies that use the web to reach out to customers, said veteran venture capitalists.

'A lot of venture capital firms look favourably at IT start-ups because once the concept takes off it is easier for such businesses to scale up,' said Rahul Chandra, director at Helion Advisors, an India-focussed venture fund with $350 million under management.

'Also venture capitalists generally have a Silicon Valley background and have a greater understanding of such types of business models,' said Chandra. Past record also matters -- a larger number of IT firms have given attractive returns.

'There is a reasonably long list of IT firms -- MindTree, Spectramind, Mphasis, Daksh, Naukri.com -- which have delivered good exits for venture capitalists,' said Natarajan.

Perhaps, that's the reason why people like Manish Malhotra - who quit his position with a top bank to start a hospitality agency - are still floundering with their business.

'Venture capital is difficult to get. I come from the banking industry and know people. But even then it hasn't been easy at all to convince them that my plans will work,' Malhotra said.

(James Jose can be contacted at james.jose@ians.in)