Seed Funding: Large Deals and Seed Investments Drive Venture Capital/Private Equity Investments to $4.5 Billion in January: Report

Mumbai: Thirteen major deals of over $100m each and an increased focus on startups helped India’s venture capital investment ecosystem post a 180% increase in overall activity in January to $4.5bn dollars on 117 transactions. Private equity and venture capital funds had invested $4.4 billion in 102 deals in the previous December.

A key driver of activity in March was investment in startups by venture capital funds, which jumped to $3.1 billion in 85 deals, well above the $700 million from the previous year, but down from $3.2 billion in December, as according to the monthly roundup from consultancy EY and industry lobby group IVCA.

E-commerce was the most active sector in terms of inflows, accounting for $1.7 billion in investments across 20 deals, he said.

“While we remain bullish on India’s private equity and venture capital sector over the medium to long term, downside risks such as rising global inflation, rising crude oil prices, tighter interest rates of interest by the US Fed and looming elections in five key Indian states remain key sensitive factors to consider in the near term,” said Vivek Soni, Partner at EY.

January saw 13 large deals worth over $100 million each totaling $2.9 billion, compared to three large deals worth $680 million in January 2021 and 12 deals worth $2.8 billion in December 2021, he said, adding that the biggest deal in January was Alpha Wave, Prosus Ventures, QIA and others invest $700 million in Swiggy.

Soni said that after a two-year decline amid the pandemic, fundraising by India-focused PE/VC funds picked up again with January 2022 recording $3 billion in fundraising, with 1, $9 billion from the HDFC Capital Affordable Real Estate Fund to provide flexible long-term debt capital throughout the life cycle of real estate projects, being the highest.

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The month saw 14 releases worth $289 million, compared to $342 million recorded from 10 releases in January 2021 and $825 million from 23 releases in December 2021, according to the report.

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