Outlook for venture capital, private equity has improved: TVS Capital

The outlook for India’s private equity and venture capital market appears positive this year, compared with last year, as ‘normalcy’ has returned in the lives of investors, said Anuradha Ramachandran, Managing Partner, TVS Capital Funds.

‘Excess funding’

Ms. Ramachandran said, there had been excess funding during 2020 and 2021 as both investors and business owners had got carried away. The pandemic had brought about structural changes. Edtech boomed because students could not go to school and they required digital education, while consumer goods had to be mostly bought online and therefore B2C ventures did well.

“Now, the question is how do you sustain growth when structural disadvantages no longer exist. That is the conundrum both investors and businesses always faced and are still facing,” she added.

‘Return to normalcy’

Ms. Ramachandran observed a lot of ‘normalisation’ had happened among investors and entrepreneurs and conversations were now getting better with realistic expectations from both sides.

“This scenario will boost the growth of the domestic funding market. We hope, from now on, things are going to be easier for both parties,” she commented.

Funding winter, set in a couple of years ago after many global funds dialed down their investments in India because of a lack of private fund availability, coupled with the global economic uncertainty.

“However, India by itself is an attractive market, and we do attract capital in the early stage investments. But in terms of return on capital, our funding markets are yet to gain maturity,” she observed.

‘Credit averse’

On lending to women, she said, women were credit averse and were very responsible, yet opportunities available for them could be fewer, and that could also be one of the reasons why a lesser number of women became entrepreneurs.

However, “it is encouraging to see some startups having women cofounders,” Ms. Ramachandran added.

Anuradha Ramachandran