VC deals set for a surge post polls: Bain & Co
Bain & Company, a global consultancy, anticipates a surge in venture capital deal activity in India after the general elections, according to a senior official.
“I see an upsurge after the elections as momentum continues and there is more clarity on the administration. I see a lot more focussed investments happening in the second half of 2024. There is a lot of diligence at the moment in H1, and H2 will see some of those investments come into fruition,” Sai Deo, Partner, Bain & Company, told businessline.
Bain & Company released the latest edition of its annual venture capital report, titled “India Venture Capital Report 2024,” in collaboration with the Indian Venture and Alternate Capital Association (IVCA).
Following a challenging 2023, the Indian VC landscape experienced several noticeable and positive evolutions, fostering optimism for 2024 and beyond. The early months of 2024 are already witnessing heightened activity, hinting cautiously at a favourable year ahead, according to Bain & Company.
“India is seeing a lot of innovation in new sectors like generative AI, deep tech, and space tech. We are positive and optimistic about 2024. Hopefully, H2 will see a lot more dealmaking come to fruition,” Deo said.
When asked which sectors are expected to see robust VC activity this year, Deo said investors can expect continued interest in emerging themes such as deep tech, space tech, generative AI, and electric mobility.
EMERGING THEMES
Deo highlighted that there are lot of technological advancements in space technology. In space tech and mobility, government incentives and policy reforms are helping, she added.
Global markets saw some form of decline in VC activity in 2023. There was VC compression in India, too, but it was not different from the global average.
Despite facing headwinds, India’s venture capital landscape exhibited resilience in 2023, marking a year of continued moderation. Investment activity echoed a muted sentiment globally, with investments in India declining by 65 per cent relative to 2022 and totalling $9.6 billion in 2023 compared with $25.7 billion in 2022.
Despite this decrease, India remains the AsiaPacific region’s secondlargest destination for VC and growth funding.
GREEN SHOOTS
Bain sees 2024 as a year of “green shoots,” with new emerging themes such as deep tech and space tech expected to make further strides; and all the dry powder that is there with global VC funds starting to see deployment, according to Deo.
“Fundraising will, however, probably be muted in 2024,” Deo said.
Rajat Tandon, President of IVCA, said that the budget’s ₹1lakh crore allocation for interestfree loans to foster innovation in agritech and defence tech is encouraging. “The ecosystem is entering an era of poised growth, akin to a high growth curve,” he added.