Venture capital (VC) companies' investment was lower by 74 per cent during the third quarter of the calendar year ended September as against the corresponding period last year, according to a study by Venture Intelligence.

The report said VC companies invested $77 milion in 17 deals in India as against $298 million in 55 deals during the same quarter in 2008.

However, the outlook seems to be improving as investment during the period is higher when compared to the April-June quarter, when VCs invested $64 million across 17 deals.

According to IDG Ventures' chairmam and managing director Sudhir Sethi, there is a return of confidence in emerging markets in general and India in particular, which is now getting reflected in the quarter-on-quarter numbers.

With the latest numbers the total VC investment in the first nine months of 2009 stands at $201million from 46 deals as against $709 million across 124 deals during the corresponding period in 2008.

Among the largest investments in the third quarter is the Lightspeed Venture Partners-led investment of Rs50 crore in Mumbai-based Itz Cash Card. Itz Cash Card is India's largest multi-purpose pre-paid card company,in which both existing investors, Matrix Partners India and Intel Capital have participation.

Information Technology and IT-enabled services' companies accounted for 41 per cent of all VC investment during June-September while the BFSI (banking, financial services and insurance) segment accounted for $25 million across five companies, due mainly to the continued interest of investors in micro-finance companies.