Comment on the growth of venture capital in India.

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Question

Comment on the growth of venture capital in India.

Answer

Over the past decades, venture capital and private equity investments have grown rapidly in developing countries, in particular India. Venture Economics data shows that from 1990 to 1999, India’s ranking was 25 /64 countries and $945.9 million was raised from venture capital and private equity for investments in India (Annamalai and Deshmukh, 2011). In the following decade, 2000 to 2009, India’s ranking improved to 13/ 90 countries and during this period $16,682.5 million worth of funds were raised for investments in India. This shows an incredible growth of 1664% (Annamalai and Deshmukh, 2011). The trend is even more encouraging for the most recent five year period 2005 – 2009, during which India’s ranking was 10/77 countries, and various funds raised $15,073.6 million for investments in India (Annamalai and Deshmukh, 2011). Funds raised during the 2005 – 2009 period represented a growth rate of 837% as compared to the funds raised over 2000 – 2004 (Annamalai and Deshmukh, 2011). This trend has continued, as venture capital investments have hit an all-time high. In 2015, from January to September, over 300 deals were closed, bringing in $1.4 billion in investments in India (TNN,2015). According to Venture Intelligence, in the year 2015, investments made by September crossed the former historical high of $1.2 billion (304 deals) recorded in the previous year (TNN, 2015). In the healthcare industry, for example, Sequoia Capital India accounted for two major transactions: $20 million to MedGenome, a bio informatics firm and $19 million to Akumentis Healthcare, a women's reproductive healthcare focused drugs maker (TNN,2015).

References

Annamalai,T,R. and Deshmukh, A. (2011) "Venture capital and private equity in India: an analysis of investments and exits", Journal of Indian Business Research, 3 (1), pp.6 - 21 TNN(2015) Venture capital investments hit an all time high in 2015. Available at: http://economictimes.indiatimes.com/news/economy/finance/venture-capital-investments-hit-an-all-time-high-in-2015/articleshow/49403733.cms (accessed on 09/08/2016)

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