Private equity and venture capital investments into Indian companies experienced a substantial decline of about 40%, reaching USD 27.9 billion by December 20, 2023. This marks a significant contrast from the previous year’s inflow of USD 47.62 billion across 1,364 deals, signaling a slowdown in funding activities.
The data, compiled by Venture Intelligence in collaboration with industry body IVCA, also revealed a marginal increase in outflows, with private equity players withdrawing USD 19.34 billion from 248 companies, compared to USD 18.45 billion in 2022 across 233 exits.
While the year witnessed a funding slowdown, industry experts remain optimistic, pointing to emerging opportunities in the domestic startup ecosystem. Rajat Tandon, President of IVCA, stated that the current green shoots of funding indicate a favorable time for venture capitalists and private equity firms to establish capital pools, capitalizing on the resilience and innovation demonstrated by domestic startups.
Tandon emphasized that the decline in investments mirrors a trend of larger but fewer investments, highlighting a strategic shift towards projects with substantial value and potential for sustainable growth.
The year’s top five investments showcased significant deals, including TPG Capital and Temasek’s USD 2.4 billion investment in Manipal Hospitals, HDFC Credila’s acquisition by Baring Asia and ChrysCapital for USD 1.35 billion, Qatar Investment Authority’s USD 1 billion infusion into Reliance Retail Ventures, Brookfield’s USD 1 billion investment in Avaada Ventures, and Baring Asia’s USD 732 million investment in fertility clinic Indira IVF Clinics.
Sector-wise, healthcare and life sciences experienced a 30.2% increase in inflow, while energy, retail, and advertising & marketing saw notable growth. Conversely, sectors like IT & ITES, BFSI, manufacturing, engineering & construction, shipping & logistics, education, FMCG, agri business, food & beverages, and telecom faced varying degrees of decline in funding.
The year 2023 also witnessed venture capitalists withdrawing USD 3.5 billion through 79 exits, compared to the outflow of USD 3.1 billion from 113 companies in the previous year. Notable VC exits included Flipkart, Lenskart, DMI Finance, Mamaearth, and Veritas Finance, showcasing the strategic and secondary sales landscape in the market.
As the industry navigates through this period of strategic refinement, characterized by a focus on quality and sustainability, the future holds the promise of renewed and robust inflows, with opportunities for discerning investments in projects that drive long-term value creation.