Praveen Paranjothi on Newnex: Key points from Bain & Company's…

Key points from Bain & Company's India Venture Capital Report…

Praveen Paranjothi · 2024-05-12T08:01:32.000Z

Key points from Bain & Company's India Venture Capital Report 2024: Funding Landscape in 2023 - Venture capital (VC) funding in India moderated from $25.7 billion in 2022 to $9.6 billion in 2023, mirroring global caution on risk capital. - Despite the decline, India maintained its position as the second-largest destination for VC and growth funding in Asia-Pacific. - The funding winter was driven by persistent inflation keeping interest rates elevated, concerns over potential global GDP slowdown, softening global consumption, and geopolitical uncertainties. - This led to a decline in deal volume from 1,611 to 880 deals and a drop in average deal size. Maturing VC Ecosystem - Investors adapted to the "new normal" by adjusting investment strategies and tightening governance. - Start-ups focused on enhancing profitability and driving deep-tech innovation. - There was a democratization of investments, with private equity (PE) and growth equity firms doubling their share in deployment, matching leading VC firms. - Domestic VC funds gained prominence, driving over 90% of new fund raises and launching thematic funds focused on emerging themes. Exit Activity - Exit activity surged by 1.7x to reach $6.6 billion in 2023, led by crossover funds comprising 65% of total exit value. - Non-IPO public market sales were the primary exit route. - Notable mega-exits occurred in consumer tech, like Flipkart and Lenskart. Emerging Themes - While sectors like B2C commerce and software/SaaS are expected to rebound, several new themes are poised to surge, including energy transition, sustainability-centric agritech, and India-nuanced AI tooling. Outlook for 2024 - Over the longer horizon, India's robust fundamentals, including consumption headroom, fiscal discipline, geopolitical positioning, and digital backbone, will continue fueling investor optimism. The report highlights the resilience and maturity of India's VC ecosystem despite challenges in 2023, with domestic funds gaining prominence, new thematic areas emerging, and a surge in exit activity, setting the stage for cautious optimism in 2024. https://www.bain.com/insights/india-venture-capital-report-2024/

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Praveen Paranjothi on Newnex: Key points from Bain & Company's…