Sharp Decline in Indian Venture Capital and Private Equity Investments in July

Investments by venture capital and private equity funds in Indian entities plummeted to USD 2.7 billion in July 2024, reflecting a 42% drop from June. However, deal numbers rose to 81 from 68 in the same period last year, indicating smaller deal sizes. The budget and angel tax removal are seen as positive moves.

Investments by venture capital and private equity funds in Indian entities dropped significantly to USD 2.7 billion in July 2024, according to a recent report released on Wednesday. The figure represents a steep 42% decrease compared to USD 4.6 billion in June of the same year and a 35% fall from USD 4.1 billion in July 2023, as noted by industry lobby group IVCA and consultancy firm EY.

Interestingly, the number of deals increased to 81 from 68 transactions observed during the same month last year, suggesting smaller average deal sizes. Vivek Soni, a partner at the consultancy firm, remarked that the second half of 2024 had commenced on a weak note, with global uncertainties, inflation, and geopolitical tensions influencing investor confidence.

Notably, the budget and the removal of the angel tax were identified as positive factors likely to stimulate investment interest in the start-up sector. However, the number of large deals, each valued at over USD 100 million, dropped to six in July 2024, aggregating to USD 1.5 billion, a 58% decrease from the previous year. Meanwhile, buyout investments captured the largest share at USD 1.2 billion across five deals, whereas start-up investments surged 31% to USD 729 million, making it the second-largest category of investments.

(With inputs from agencies.)