Global venture capital investments have dropped from $95.5 billion in the second quarter of calendar 2024 to $70.1 billion in Q324; the number of VC deals, too, dropped from 9,270 to 7,227 over the same period, reported KPMG on Tuesday.
However, the consulting firm said India bucked the global trend. Despite a decline in Q3, VC investment in the country remained solid at $3.6 billion, helped by several significant raises by consumer-focused businesses, it observed.
The large fundraises by B2C businesses in India was an incredibly unique trend, the opposite of trends seen in most other Asian jurisdictions and other regions of the world — where B2B companies attracted the greatest levels of VC investment, KPMG said.
Nitish Poddar, Partner and National Leader, Private Equity, KPMG in India said, ‘‘As expected, there has been a bounce back in activity which is led by consumer focussed consumption sectors. This trend is expected to continue.’‘
While fintech businesses continued to attract a lot of attention in India, VC investors in the space have become more cautious in recent quarters as traditional banks have increasingly introduced their own fintech products aimed at the large unbanked and underbanked segments of the population, it reported.
Investors were expected to back businesses which align with two key themes – path to profitability and / or strong growth trajectory with high level of customer engagement. This coupled with robust capital markets was what was driving this renewed VC interest, Mr. Poddar added.
Outlook for 2025
The report further said, In India, there was a very strong optimism that the VC market was recovering and that the next few quarters, well into 2025, could see the level of VC investment really start to climb.
With the U.S. election looming large on the global stage heading into Q424, VC investment would likely remain subdued for most of the quarter as investors take a wait-and-see approach until the results are decided.
According to KPMG analysis, AI will likely remain a hot area of investment, in addition to defence-tech given ongoing global geopolitical tensions. There is a growing sense of optimism that exit activity is readying for a rebound, which would be very beneficial for the VC market globally heading into 2025.
Published – October 29, 2024 09:12 pm IST
