Indian IT Millionaires settled in Silicon Valley are looking to raise hundreds of millions of dollars to invest in Bollywood.

Over 600 venture capitalists, angel investors and bankers including Kanwal Rekhi, Shailesh J Mehta, Rahul Bhasin, Raj Dugar and Brajesh Mehra participated in a Media and Entertainment conference in Delhi this week.

The IndUS Entrepreneurs (TiE), a group of successful Indians settled overseas hosted the event and are planning to attract funds to the tune of $800m-plus to India from other countries (especially the US) by 2006.

According to TiE founder member Saurabh Srivastava, of the $1bn of VC investments in India in 2001-02 about 40% was the result of direct investments influenced by TiE members. "Entrepreneurs and VCs abroad are getting more serious about India with the US economy getting tougher in the US. TiE members already have high stakes in India and their engagement is now getting stronger," Srivastava added. VC investments in the year 2006 are expected to reach $1.5bn, according to Srivastava, who is also the president of the Indian Venture Capital Association (IVCA).

The success of global blockbusters Laagan and Devdas seems to have encouraged an entire generation of Bollywood to sell itself to venture capitalists and high net-worth expatriate Indians. Silicon Valley-based VC Kanwal Rekhi and infotech entrepreneurs Saurabh Srivastava and Pradeep Gupta have already invested in Bobby Bedi-promoted Kaleidoscope Entertainment. Bedi told "venture capital funds worth $200m are expected for the entertainment industry alone in the next few months".

According to Amit Khanna, chairman, Reliance Entertainment, "India's entertainment industry - film and TV software, animation, post-production, distribution and exhibition businesses - boasts private equity investment worth $200m as of date. Given the interest that the Indian Diaspora has in Bollywood, I see the potential for another $100m flowing into the industry in course of the next two years."