With IPO hopes high, AIFs inclining towards late-stage startups: Report

Investments by private equity players and venture capitalists (VCs) through alternative investment funds (AIFs) have shown a rising inclination towards late-stage startups over the last decade, noted a report by Oister Global and Crisil.

 

Of the total investments by value, 39 per cent in FY24 went into late-stage startups, compared to only 18 per cent in FY14.

 

“Investors are seeing opportunities in late-stage companies that are garnering a strong market position and lucrative exits through IPOs or acquisitions. Also, these companies are generally mature, have regular revenue streams, and established business models. This shows that the private investment market in India is more mature than it was a decade ago,” the report stated.

 

However, early-stage deals continue to account for the largest share of the private equity-venture capital (PE-VC) investment pie by volume.

 

The report also highlights rising investments from non-individual limited partners (LPs) such as corporates, trusts, banks, and insurance companies. Furthermore, several success stories from non-tier 1 cities, such as Razorpay and CarDekho, have opened up investment opportunities. In FY25, non-tier 1 cities accounted for nearly 8 per cent of total deals.

 

“We expect a massive upside coming from the secondary market. If we start combining the asset class of equity into the private markets, direct investments into companies, secondary opportunities, and credit options such as venture debt, I think this market is poised to grow very significantly over the next five years,” said Sandeep Sinha, Co-CEO & Co-Founder, Oister Global.