Start-up driven PE/VC deals hit $16 bn mark in 2015

Corporates and multinational companies are setting up funds to invest in smaller startups and marquee entrepreneurs

Volumes in private equity and venture capitalists investments in 2015 touched an all-time high with close to 1,049 deals worth $16 billion largely due to rise in investments in Indian startups,  Grant Thornton's The Fourth Wheel 2016 reported.

While, the significant increase in volume was due to an impressive level of interest among PE and VC investors in startups (over 600 out of the total of 1,049 investments), deal value growth was driven by large investments.

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The report, which has been produced in association with IVCA, said the year witnessed an increase in big ticket deals valued over $500 million each. "This is an evidence of a promising business environment that has the potential to attract big investments," the report said.

Sector-wise, IT and ITeS has been the main driver for growth in 2015 on the back of impressive level of interest in startups in e-commerce space. This interest in startups enabled the sector to reach a 10 year peak level of investment value ($7 billion).

"For a robust market we need both the ends firing -- the startup end and an active IPO market. Indian PE space was suffering because of the lack of adequate activity in both these ends. However, we have seen both these correct in 2015 which is good news for the industry," Grant Thornton India LLP Partner Harish HV said.

According to the report, an interesting trend that is emerging is the corporates and multinational companies setting up funds to invest in smaller startups and marquee entrepreneurs making investments in their personal capacity.

"Looking at the present scenario there is enough funds to be deployed, but the challenge still remains to identify an attractive investment opportunity," it added.