Sharp Decline in Domestic Company Funding from Private Equity and Venture Capital

The past year has seen a significant downturn in capital flow to domestic companies from private and venture capital investors. A 40% decrease to $27.9 billion marks a notable plunge in inward investments. Concurrently, there's been a slight uptick in the outflow of funds, with $19.34 billion leaving year over year.

Funding Downturn and Investment Strategies

Data compiled by industry experts shows that by December 20, 2023, the total invested amounted to $27.9 billion spread across 697 deals. This figure contrasts starkly with the $47.62 billion amassed through 1,364 transactions in the previous year. Despite this decrease, which was characterized by larger but fewer investments, there's optimism about future investment opportunities. These investments tend to be directed towards projects with substantial potential for creating value and achieving sustainable growth.

The predominant investments were observed in sectors showing resilience and offering innovative responses to market demands. In particular, healthcare and life sciences, energy, retail, and advertising & marketing sectors have seen higher inflows in comparison to the prior year. In contrast, sectors such as IT & ITES, BFSI, manufacturing, and engineering & construction were among those suffering a 'funding winter,' with considerable drops in investment.

Significant Deals and Exits

Highlighting the year's biggest deals, several significant transactions headlined the investment space. These included multi-billion dollar infusions into companies like Manipal Hospitals, HDFC Credila, Reliance Retail Ventures, Avaada Ventures, and Indira IVF Clinics. On the exit front, private equity saw a higher turnover, with a number of high-profile sales such as Flipkart and Lenskart, generating substantial returns.

Despite the current slowdown, the funding landscape is expected to regain its momentum. This belief is fueled by the enduring strength and adaptability of the domestic startup ecosystem, expected to draw renewed interest and capital in the coming periods.

investments, equity, capital