The Acceleration In Growth Should Pick Up From Here For The Next Decade: Blume Ventures' Karthik Reddy The next 10 years present an opportunity for explosive growth in India, and the alternate capital ecosystem will be among the leading drivers of this growth, facilitated by the rapid growth in digital infrastructure.
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Following a difficult 2022, the Private Equity and Venture Capital (PE/VC) market in 2023 saw considerable changes and alterations in investment strategies as it continued to navigate through turbulent waters. PE/VC investments and exits saw a sharp fall the year before, which was indicative of cautious investor mood in the face of geopolitical tensions and concerns in the world economy.
PE/VC investments continued to decline in 2023, with an 11% annual decline in investment value to USD 49.8 billion, according to a trendbook data release by IVCA and EY this year. It is noteworthy that the startup sector was hardest hit by this fall, with a significant 42% drop in number of deals and and a 53% drop in dollar value of investments.
In spite of these difficulties, several industries—like real estate, infrastructure, and healthcare—showed resiliency by growing in comparison to the prior year. Karthik Reddy, Chairperson, IVCA, and Co-founder and Managing Partner, Blume Ventures expressed his optimism on this. At a recently held IVCA conclave, he said, "We're in the phase where all the groundwork has been established; the foundation is very strong, so the acceleration should pick up from here for the next decade or so."
The next 10 years present an opportunity for explosive growth in India, and the alternate capital ecosystem will be among the leading drivers of this growth, facilitated by the rapid growth in digital infrastructure.
"Broadly, venture, private equity, real estate – all of these asset classes, credit depend on long-term pools of capital. We have long-term pools, but they haven't been unshackled from taking this risk. If you go to provident funds, pension funds, PFRDA, all of these folks, a small sliver of their capital, which the government has permitted now – up to 5% to come into these asset classes now, has actually not started flowing in," added Reddy.
The PE/VC ecosystem will continue to change in the upcoming years due to partnerships between traditional investors and actors like pension funds, specialist secondaries investors, and SWFs (sovereign wealth funds), as well as changes in consumer behavior and technology. Indian PE/VC investments are expected to accelerate as the interest rate curve starts to taper downward and policy continuity can be underwritten after the general elections.
