Bullish Outlook. Surge in PE/VC Investments to propel India’s start-up ecosystem this year: Peak XV

Indian start-ups are well on track to get $10-12 billion of funding this year and global private equity and venture capital (VC) funds are now sitting on about $20 billion of “dry powder” that remains uninvested and committed to India, Rajan Anandan, Managing Director, Peak XV, a VC firm, said on Monday.

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“There is extraordinary amount of private capital waiting to be invested into private companies, mostly start-ups”, Anandan said at the first-ever ‘Startup Mahakumbh’ in the Capital.

“We are going to have an ecosystem that will get $10-12 billion for next couple of years, and it will grow at a natural pace it should. A $10 billion a year run rate is enough to build our ecosystem”.

Anandan also said that he sees at least 100 Indian start-ups getting listed on the bourses in next 7-8 years. 

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Noting that India had a run rate of $8-10 billion capital mop-up by start-ups prior to 2021-22, Anandan highlighted that PE and VC inflows into the country had zoomed in 2021-22 to $60 billion —got in two years what six years funding was.

“Last year, it was $7 billion, which people said is low. Not really. It could have been zero also because basically six years of funding came in just two years,” he said.

Vibrant market

Anandan also noted that India today has the most vibrant public markets in the world. Last year, there were 280 companies that went public in India and 40 of them raised over ₹ 400 crore.

“India today has about 20 start-ups that are publicly traded. We think over the next 7-8 years there will be 100 Indian startups that will go public. Whether private or public there is tremendous vibrancy,” he said.

“In US, their IPO market is closed. Our IPO market is open for business for start-ups. Founders should therefore focus on building high quality business and we have extraordinary amounts of capital today. What investors are looking for is high quality businesses.”

He also said that start-ups in India will be playing a significant and an incredible role in India’s March towards a $5-trillion economy. 

Anandan noted that venture capital and  start-ups in the US are now all about artificial intelligence. 

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