While link-ups between venture capitalists in Silicon Valley and India are making headlines, a group of European entrepreneurs and investors has been quietly teaming with high-profile Indian venture capitalists to raise a Europe-India fund.

Red Herring has learned that the fund, called Amaya Venture, will allocate 51 percent of its funding to Indian companies in the telecommunications, media, and technology sectors, and invest the rest in healthcare, automotive, retail, and finance. One-third of the money will be disbursed to early-stage companies, with the remaining two-thirds going to growth companies.

Amaya Venture has raised $30 million so far from institutional investors, family offices, and private investors in Europe, the United States, the Middle East, and Asia but the target is $150 million.

About a dozen European entrepreneurs have agreed to invest in the fund so far, including Brent Hoberman, co-founder of LastMinute.com; Stefan Roever, co-founder ofGermany’s Brokat Technologies and founder of Cupertino, California-based Navio Systems; and Morten Lund, an early investor in Skype who has funded some 43 other startups.

About a dozen European entrepreneurs have agreed to invest in the fund so far, including Brent Hoberman, co-founder of Germany’s Brokat Technologies and founder of Cupertino, California-based Navio Systems; and Morten Lund, an early investor in Skype who has funded some 43 other startups.

A half-dozen offices that invest on behalf of some of Europe’s largest family-run businesses have also said they will invest in Amaya Venture.

“Will India be hot? As sure as summer will come,” says Mr. Lund, a Danish entrepreneur who advises startups in Asia, Europe, and Brazil through an entity called Lund Kenner.

Most European venture capitalists are not rushing to set up shop in India like their U.S. counterparts have done. That’s because they lag U.S. venture firms in their recovery from the bust and would have a hard time convincing limited partners to give them money to invest abroad. European entrepreneurs, like those behind Amaya Venture, are more willing to take a risk by entering India now, say industry observers.

The new fund’s general partners include software pioneer Saurabh Srivastava, the president of the Indian Venture Capital Association and chairman emeritus of the National Association of Software & Services Companies (NASSCOM); Rishi Sahai, co-founder of India’s Band of Angels and a general partner at Infinity, an early-stage Indian venture capital fund; and Bundeep Singh Rangar, ex-chief operating officer and founding member of Ariadne Capital, a London-based advisory and investment firm, and chairman of IndusView, a corporate advisory service that specializes in helping Western companies expand into India.

Spawning Disruptive Technologies

It is estimated that more than 40 new funds targeting India, most with U.S. backers, are currently trying to raise capital. The bet is that India will replicate the success of its large IT service companies in a new generation of product and intellectual property-based businesses. Many venture capitalists are banking on India spawning several disruptive technologies from its booming consumer telecom and Internet sectors.

At least one other new venture capital fund, Silicon Capital, is focusing on a Europe-India link, but it will focus exclusively on semiconductors. Silicon Capital was started by Rahul Sud, the founding CEO of Lattice Semiconductor and a former vice president for emerging businesses at Geneva-based STMicroelectronics. While at STMicroelectronics, Mr. Sud spearheaded an initiative from India to create a global open-source semiconductor movement.

That effort ultimately stalled, and Mr. Sud has not yet revealed the size of the Silicon Capital fund or his partners. Silicon Capital’s first investment is in New Delhi-based RF Logic, a radio frequency design services provider. RF Logic does high-level design work for Geneva-based Abilis Systems, which makes mobile TV chips.

Rather than being just one more team trying to raise money for a new U.S.-India fund, Amaya Venture’s general partners say they believe that it makes more sense to be among the first to exploit ties between India and Europe. “The E.U. is India’s biggest trading partner,” notes Mr. Rangar. Europe is also the hardest nut for Indian companies to crack, because it is a fragmented, complicated market. “We can be their gateway to Europe,” says Mr. Rangar.

Amaya Venture also wants to be the gateway back to India for expatriate Indians in London and elsewhere in Europe who want to return to set up new businesses.

The new Europe-India fund plans to capitalize on cultural similarities between India and Europe. A big percentage of India’s small- and medium-sized businesses are family-owned. The owners need capital to expand their companies internationally, but abhor the idea of borrowing money from banks. Venture capital represents an interesting alternative. Families behind some of Europe’s businesses have the same mentality, says Mr. Sahai.

And when it comes to doing business in both India and Europe, relationships are given more weight than anything else, says Mr. Sahai, who adds that the best way to reach family-owned businesses in India is through their network of lawyers and accountants. Mr. Sahai, a chartered accountant, believes his background and contacts will help Amaya Venture find deals.

Amaya Venture’s other general partners also have extensive contacts in both India and Europe. The venture fund’s team includes all of the general partners and investment managers who remained at Infinity Technology Investments, an early-stage fund co-founded by Mr. Srivastava that has come to the end of its term.

In addition to being a well-known angel investor and venture capitalist, Mr. Srivastava is considered one of the architects of the Indian software industry. He founded IIS Infotech, one of India’s most successful software companies. It was acquired in 1997 by Xansa, a U.K.-based public IT and business process outsourcing company with revenues of over $700 million.

Mr. Srivastava was on Xansa’s board until March 31 and is on the boards of the Indian government’s two national-level venture funds and on two state-level venture funds. He is also a member of the investment committee of the Securities and Exchange Board of India.

During the 10 years that he worked for Andersen in India, Mr. Sahai was an adviser on large deals, including Warburg Pincus’ 1999 $40-million investment in Bharti Tele-Ventures, one of the first private equity investments in telecom in India. Warburg Pincus went on to invest a total of $292 million and then sold two-thirds of its stake in Bharti Tele-Ventures in 2005 for $1.6 billion.

At Infinity, Mr. Sahai was the deal champion for New Delhi-based Indiabulls, a five-year-old retail financial services company that listed on the Bombay Exchange in September 2004 and has a current market cap of around $850 million. He is also on the executive board of IndusView, along with Manish Gupta, the former head of Microsoft’s telecom team in India.

Mr. Rangar worked at Knight Securities and Jacob Rothschild’s investment unit LootLab before co-founding Ariadne Capital and IndusView. While at Ariadne Capital, he acted as an adviser to startups Skype, Navio Systems, and Espotting as well as advising the boards ofT-MobileU.K., Volkswagen, and BT on emerging technologies and new markets.

While IndusView advises European companies like U.K.-based software firm Sage on how to expand into India, Amaya Venture will fund Indian companies’ expansion into Europe and across the globe.

“We are starting with a global DNA,” says Mr. Rangar. Amaya Venture “will be the European Westbridge,” he says, referring to the early-stage Indian fund that recently merged with Silicon Valley venture firm Sequoia Capital to form Sequoia Capital India. “Europe has accumulated capital and it has a high level of technological innovation, but is also a stagnant economy and low risk environment; India has less capital but is a highly entrepreneurial, risk-taking culture and has an exploding economy,” says Mr. Rangar. “We are trying to bring together the best of the Old World and the emerging world.”