When fund managers go out to raise money from their investors, they do so based on strict mandates. One may promise to invest only in information technology (industry), another in South Asia (geography), and yet another only in buyouts (type of deals). So, when you are thinking of pitching to a private equity (PE) investor, make sure you are talking to the right one. Increasingly, though, such sharp demarcations are beginning to blur. Why? Partly because funds are becoming more opportunistic, and partly because investors are giving them the elbow room to be flexible. That said, it's still possible to create a "food chain" for the risk capital ecosystem. Here's how the industry maps out:

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Fund Of Funds

These are, as the name suggests, funds that invest in funds. For example, calpers (California Public Employees' Retirement System), which invests hundreds of millions of dollars in other funds, and Adams Street (an investor in ChrysCapital). But India's first fund-of-fund (FoF), called the Evolvence India Fund, is about to be set up by Dubai-based V. Jagannathan. He's raising $250 million that will largely be invested via funds like UTI Ventures, IL&Fs, GW Capital, and Baring. New Jersey-based Rumson Capital Advisors is also talking of putting together a $150-250 million (Rs 660-1,100 crore) FoF for India and China.

The Buyout Funds

Although Baring India did a buyout as far back as 1998 (see Landmark Deals), this is a relatively new category for India. But it's one that has taken off with a bang. Texas Pacific Group, Carlyle, and Blackstone are primarily buyout funds that invest large amounts (usually upwards of $100 million or Rs 440 crore) in entire businesses. Their objective is to gain operational control of the business, add value to it (turn around, scale it up) and then sell it at a huge premium. When such a deal primarily uses the cash flow of the business to raise debt and service it, it's called a leveraged buyout.

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Mid-market Private Equity Funds

This is now the staple of the PE scene in India. These funds, which traditionally have included CVC (Citi) International, ChrysCapital, Actis, Baring and, of late GW Capital, Oak and Kotak, invest between $10 million (Rs 44 crore) and $30 million (Rs 132 crore) a pop in mid-cap stocks (either listed or unlisted) across sectors. This is also the most popular variety in India because most of the private equity demand comes from mid-sized companies that are expanding.

Late-stage Private Equity Fund

Warburg, Temasek, General Atlantic Partners, Newbridge, Carlyle, 3i and Apax are some of the funds that fall in this category. icici Venture does too, except that this India private equity giant also invests in start-ups. Here, the average deal size is slightly larger, ranging between $30 million (Rs 132 crore) and $100 million (Rs 440 crore) and, therefore, the target companies are relatively large-cap stocks. For example, Newbridge and Temasek invested $190 million (Rs 836 crore) in Matrix Labs, and Warburg invested $113 million (Rs 497.2 crore) in Moser Baer, both in the first calendar quarter of last year.

Real Estate Funds

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Like buyouts, these funds are a new phenomenon in India. Delhi-based investor Gaurav Dalmia set up Landmark Holdings in 2003. to invest in real estate projects. So far, he claims to have invested $500 million (Rs 2,200 crore) in 10 projects. ICICI Venture too raised $300 million (Rs 1,320 crore) in April this year for a dedicated real estate fund. Foreign investors are also getting into the act. San Francisco-based Farallon Capital Management has made an entry through India Properties (a JV with Indiabulls).

Hybrid Hedge Funds

Technically, hedge funds aren't allowed to invest directly in the Indian markets. However, a new variety of hybrid hedge funds has emerged of late. Examples: Arshad Zakaria's New Vernon Bharat, which dabbles in everything from private equity to corporate bonds; Oaktree Capital Management and Pequot Capital are some others that are said to be operating with a flexible investment philosophy.

Venture Capital Funds

These funds, which invest in start-ups, are increasingly a dying breed because investors just don't want to take the high risk that goes with venture investing. However, in India, there are a few brave firms that still invest in start-ups. Among them are WestBridge Capital Partners, ICICI Venture, JumpStartUp, UTI Ventures, IFC, Intel Capital, SIDBI and ChrysCapital. Investments in start-ups typically range from a couple of million dollars to $20 million (Rs 8.8-88 crore).