There are emerging indicators suggesting a resurgence in venture capital and private equity funding for startups, marking a distinct turnaround after a period of stagnation lasting 15-18 months. Several major funds that had previously withdrawn from the Indian market are now re-entering the scene with renewed vigour.
Several major funds that had previously withdrawn from the Indian market are now re-entering the scene with renewed vigour, indicating growing confidence in the startup ecosystem. For one, reports of e-commerce player Meesho engaging in discussions with major investors like SoftBank and Tiger Global to secure funding of approximately $300 million have sparked optimism within the startup community. In particular, the return of Japanese conglomerate SoftBank to the Indian investment landscape after an absence of 18 months is seen as significant, potentially inspiring other investors to follow suit.
Data from Venture Intelligence revealed that VC investments in Indian startups doubled to over $2 billion across 183 deals in the first quarter of 2024 compared to the preceding December quarter. Key deals in the March quarter included enterprise software firm Kore.ai raising $150 million from Vistara Growth and FTV Capital, mobile app Pocket FM securing $103 million from Stepstone Group and Light-speed Ventures, and beer maker Bira obtaining $50 million in funding.
Indian family offices are also actively participating in investment activities, with reports indicating Azim Premji’s investment fund, Premji Invest, exploring investments in startups such as graphic design tool company Canva and medical AI startup Hippocratic AI.
While late-stage funding experienced a decline last year, there is now a resurgence of capital flowing into late-stage investments, where startups have already demonstrated operational traction. The due diligence process for deals has become more stringent, with investors conducting thorough evaluations of financials before making investment decisions. Deal gestation periods have lengthened, reflecting a cautious approach by investors in selecting viable investment opportunities.
