India bucks global trend, VC investment remains robust at $3.6 bn in July-Sep

NEW DELHI: India bucked the global trend of decline in VC investment during the third quarter of 2024, with significant raises by consumer-focused businesses, according to a report on Tuesday.

VC investment in India remained solid at $3.6 billion in the quarter, helped by a number of raises by consumer-focused businesses, according to the KPMG Private Enterprise’s Venture Pulse report.

The large raises by business-to-consumer (B2C) businesses in India was an incredibly unique trend, the opposite of trends seen in most other jurisdictions in Asia and in other regions of the world — where business-to-business (B2B) companies attracted the greatest levels of VC investment.

According to the report, 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.

There is very strong optimism that the VC market is recovering and that the next few quarters could see the level of VC investment really start to climb, the report mentioned.

“As expected, there has been a bounce back in activity which is 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/or strong growth trajectory with high level of customer engagement, ” explained Nitish Poddar, Partner and National Leader, Private Equity, KPMG in India.

“This coupled with robust capital markets is what is driving this renewed VC interest, ” he added.

AI investments drove the lion’s share of VC investment activity in Q3 globally.

AI will likely remain a hot area of investment, in addition to defense-tech given ongoing global geopolitical tensions. There is a growing sense of optimism that exit activity is readying for a rebound, which would be very beneficial for the VC market globally heading into 2025, according to the report.