India has bucked the global trend with significant raises by consumer-focused businesses, and despite a decline in the third quarter of 2024, VC investment in India remained solid at USD 3.6 billion.
The massive funds raised by B2C businesses in India was incredibly unique, going against market trends in most other jurisdictions in Asia and in other regions of the world where B2B companies attracted the greatest levels of VC investment. While fintech businesses continued to attract a lot of attention in India, VC investors in the space have become more cautious in recent quarters as traditional banks have increasingly introduced their own fintech products aimed at the large unbanked and underbanked segments of the population. These are part of an observation by KPMG’s Private Enterprise’s Venture Pulse report, which said that, in the third quarter of 2024, VC-backed companies raised USD 70.1 billion across 7,227 deals.
According to the report, there is very strong optimism that the VC market is recovering in India and that, in the next few quarters, the level of VC investment will really start to climb.
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“As expected, there has been a bounceback in activity led by consumer-focused consumption sectors. This trend is expected to continue, and investors will back businesses which align with two key themes—path to profitability and strong growth trajectory with a high level of customer engagement. This, coupled with robust capital markets, is what is driving this renewed VC interest,” remarked Nitish Poddar, Partner and National Leader of Private Equity, KPMG in India.
VC investment in India was very solid in the quarter, including quick delivery company Zepto (USD 360 million), hotel-booking company OYO Rooms (USD 349 million), and edtech company PhysicsWallah (USD 210 million). Other big deals in India included beauty-focused online marketplace Purplle (USD 120 million), and eyewear retailer Lenskart (USD 100 million). Outside of the consumer retail space, two and three-wheel electric vehicle and components manufacturer Omega Seiki Mobility also raised USD 150 million during the period.
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However, VC investment in Asia fell for the fifth consecutive quarter, driven by a slowdown in deals activity and the absence of USD 1 billion-plus megadeals within the region. Philippine-based fintech Mynt’s USD 788 million raise accounted for the largest deal in Asia during the period, followed by a USD 688 million raise by China-based Baichuan AI, and large raises by two semiconductor manufacturers, China-based ICLeague (USD 415 million) and Singapore-based Silicon Box (USD 363 million). According to the report, the top five deals were rounded out by a USD 360 million raise by India-based Q-commerce company Zepto.
KPMG sees Asian countries’ VC investment in China to remain relatively subdued, with the exception of government priority sectors like AI and semiconductors. In India, however, there is very strong optimism that the VC market is recovering and that, in the next few quarters, the level of VC investment will really start to climb. Despite some economic challenges, VC investment in Japan is expected to remain steady in the upcoming quarter, with AI, deep tech, and biotech continuing to attract significant attention from VC investors.