Domestic VC firms continue to garner record investments

EVEN AS GLOBAL ECONOMIC CLIMATE REMAINS CAUTIOUS

DOMESTIC VENTURE CAPITAL (VC) and private equity firms in India have been successful in attracting multi-million-dollar investments in the past two calendar years (CY2022 and CY2021), despite the funding slowdown and global bear markets.

This success has come as a surprise to many, as the global economic climate has been cautious and investment activity has been relatively slow.

In the past, domestic VCs and private equity (PE) firms in India were typically dependent on institutional and Limited Partners (LPS) such as life insurance firms, global endowment funds, and global sovereign funds.

However, this has changed in the last 2-3 years with Indian founders, cash-rich angel investors, and Indian family offices pitching in as LPs into domestic VCs and PEs, multiple investors told Fe.

Data from Tracxn showed that domestic VCs have been able to capture a majority of the investments into Indian startups despite stiff competition from global VCs. In CY2022, domestic VCs invested more than $18 billion in startups.

And in CY2021, when the Indian startup ecosystem had a funding bull run, domestic VCs contributed around $35.4 billion in funding to startups, which is significantly higher than the $8.2 billion invested in CY2020 and $12 billion in CY2019