Executive summary
India’s start-up narrative remains strong and optimistic.
The country has become the third largest8 ecosystem globally with more than 1,12,000 start-ups in existence as on October 3, 2023.
A key contributor to this success has been the PE-VC markets, which have risked capital and sown financial knowhow.
Geographical penetration has deepened as well. PE-VC deal activities have gone beyond Tier 1 cities, deals in these cities have surged ~220x in a decade - from Rs 318 million in fiscal 2013 to Rs 71 billion in fiscal 2023.
Technology has been at the core of investments in the PE and VC markets in India, transforming the sectoral distributions in the past 10 years.
The growth of the private equity markets has also been funnelled by the rising popularity of AIFs. They have become an integral part of the domestic PE-VC market and a vital source of capital to startups. This segment has picked up pace in the past five years, with two-thirds of the 1,096 AIFs registered as on March 31, 2023, having been registered during this period.
Commitments have risen at an annualised 38%9 in the past five years to Rs 8.34 trillion as of March 2023.
To be sure, the unlisted markets have expanded, as reflected in significant reduction in deployment time indicated by the increase in investments made to funds raised for Category I and II AIFs in the past five years ended March 2023.
