Gujarat Venture Finance Limited (GVFL) has invested Rs. four crore from its new information technology (IT) fund in the equity of Net4nuts Limited. The new company is temporarily housed in GVFL's spacious and rent free "incubator" on the top floor of its corporate office on Ashram Road, where it is working on developing a top-secret internet application which will help users "create their own personalised workspace on the net."

Says USA-returned founder Chirag Patel, who is designated the company's Chief Nut, "We've applied for a world-wide patent for our product in the UA, which is probably a first for an Indian company. And, GVFL, which is one of India's oldest and sanest venture capital companies, has given us a phenomenal valuation."

GVFL/s Rs. 18 crore IT fund was set up earlier this year with Rs nine crore contribution from the state government, matched by an equal contribution from SIDBI.

After Net4Nuts, GVFL has short listed nine more high potential projects, which include an applications software company in Baroda, a telecom software training outfit and a unified messaging start-up in Ahmedabad and several dot.coms in Vallabh Vidyanagar, Ahmedabad and Baroda. Says managing director Vishnu Varshney, "The IT euphoria in Gujarat is such that this fund is going to prove inadequate. We expect to use it up by the end of this year."

The IT focused fund is the fifth of a series GVFL has launched since it began operations as a subsidiary of the Gujarat Industrial Investment Corporation (GIIC) in 1990, with a Rs. 24 crore fund created through contributions from the World Bank, Commonwealth Development Corporation, IDBI and various State corporations. GVFL has so far invested around Rs. 100 crores in the equity of various companies, in Gujarat and in other states and the share of IT in its portfolio has been growing steadily in recent years. It is now planning a sixth fund, of Rs. 100 crore, its biggest till date.

Recent investments include Parsec Limited, a Gurgaon based company in the business of call centres, Chakra.com Limited, a B2B company based in Bangalore and e-Infochips, a chip design company in Ahmedabad. It has also invested in entertainment ventures like Rathikant Basu's Tara-Gujarati channel and TMG, a Bangalore based company which produces IT related television programmes and has recently launched a magazine called CIO.

GVFL is planning to "harvest" some of its IT investments in the coming year, beginning with Radiant Software in August. GVFL's original investment in the Chennai based company was Rs. three crore, at Rs. 30 per share and it expects to get back five times the amount through an initial public offer (IPO) priced at Rs. 150. GVFL also hopes to push through its stalled disinvestment in the Mumbai based Akshay Software, where it has invested in Rs. 2.5 crore worth of shares at par and expects to receive Rs. 80 per share through an IPO, slated for later this year.