Venture capitalists were eager to back advertising start-ups in India during the second quarter of 2008, according to the Quarterly India Venture Capital Report released by Dow Jones VentureSource, which found that $89 million-nearly 37% of the region’s quarterly investment total-went to five advertising/marketing companies, more than any other sector. Overall, India attracted $238 million in venture investment with 17 deals closed in the second quarter, a 120% increase over the $108 million invested in 12 deals during the same period in 2007.

The data showed that India saw seven second-round deals completed in the second quarter, garnering a record $161 million and exceeding the $118 million that was invested in second rounds in all of 2007. Ten seed and first round deals were also completed during the quarter, accounting for nearly $77 million in venture capital investment. No later-stage deals were completed.

Overall, India’s Business & Financial Services industry, which includes the advertising/marketing sector, received the bulk of investment with $131 million invested in nine deals, records on both accounts. Second in terms of investment was India’s Information Technology (IT) industry, which recorded three deals and $33 million worth of investment during the second quarter, a 55% decline from the $73 million invested in nine venture capital deals during the same period last year.

“We’ve seen deal activity in India hold steady for three consecutive quarters but this most recent quarter posted the second-highest investment total on record, due in large part to the $70 million second round for Laqshya Media of Mumbai, the second-largest deal ever completed in India,” said Jessica Canning, Director of Global Research for Dow Jones VentureSource.

In terms of development stage, companies with active revenue streams attracted the most capital in the second quarter of 2008, as nearly $151 million went to 10 deals for companies that were shipping products and another $4 million went toward a deal for a profitable company. Just six deals, worth $83 million, were for companies currently developing products.

The Quarterly India Venture Capital Report covers venture capital investment, which Dow Jones VentureSource defines as early-stage capital made available to entrepreneurial companies in exchange for ownership in the form of private securities. These investments are often seen as shorter-term and do not include private equity investments such as leveraged buyouts or mezzanine and debt financing.