Driven by increased deal volume and larger average deal sizes, the Venture Capital (VC) industry invested record Rs 72,000 crore in 2019, the Bain & Company’s India Venture Capital Report 2020 stated. Registering a growth of 55 per cent as compared to 2018, the industry witnessed a 30 per cent increase in deal volume and a 20 per cent rise in average deal size.
The report was prepared by Bain & Company in partnership with Indian Private Equity & Venture Capital Association (IVCA).
"Despite substantial capital deployment, dry powder availability for VC investing in India was at an all-time high of USD 7 billion at the end of 2019, indicating likely continued investment activity in 2020," the report said.
Talking about the report, Arpan Sheth, partner, Bain & Company said, “Despite the global economic climate, India’s start-up and VC ecosystems continue to thrive as investors take a longterm view based on the country’s growth potential. We go into 2020 with record-high levels of dry powder, counter-balanced with caution and an underlying optimism in the long-term potential for the ecosystem.”
The report highlighted that about 80% of VC investments in 2019 were concentrated in four sectors: Consumer tech, Software/SaaS, Fintech and B2B commerce and tech. Consumer tech continued to be the largest sector accounting for approximately 35% of the total investments with several scale deals exceeding $ 150 million.
“The Indian VC industry had a landmark year in 2019. However, India-focused VC investments raised fewer funds this year, the fundraising outlook for 2020 remains positive among both LPs and GPs. Following the brief moderation that we saw between 2015 and 2017, the VC industry in India has been in a renewed growth phase and we see that continuing," Sriwatsan Krishnan, partner, Bain & Company said.
Pointing the continuous growth in the startup ecosystem of the country, the report maintained that between 2012 and 2019, the number of start-ups in India increased by 17 per cent each year, while funded startups increased faster at 19 per cent CAGR in the same period. Currently, of almost 80,000 start-ups in India, only about 8% are funded, indicating room for investments.
"The prompt resolution of issues like angel tax by regulators and the initiative of hosting the second edition of Global Venture Capital Summit by Commerce Ministry, DPIIT, are much appreciated & welcomed by the Startup/Venture Capital industry.” said, Rajat Tandon, President, IVCA.