In a recent report, investment activity from private equity (PE) and venture capital (VC) firms saw a notable downturn, totaling $13.7 billion in the first quarter of 2025. This figure reflects a 14% year-over-year drop and a 2% decrease from the previous quarter. The findings, released by the Indian Private Equity and Venture Capital Association (IVCA) alongside EY, highlight ongoing investor hesitancy amid various global challenges.
Investor Sentiment and Market Trends
According to Vivek Soni, a partner at EY, current investor attitudes are shaped by a range of macroeconomic and geopolitical factors. Key influences include:
- Policies from the current U.S. administration
- Tariff decisions
- Shifts in interest rates by central banks
- Eroding capital market valuations
Soni remarked, “Investors are taking a cautious approach, as private market valuations have not yet seen significant corrections. They are diligently assessing the evolving landscape to ensure that both macro and micro risks are appropriately reflected in their investment strategies.”
Deal Activity and Valuations
The report further reveals that the total number of deals during this quarter dropped to 284, marking a 20% decline from last year and an 11% reduction from the previous quarter. Notably, large transactions dominated the landscape, accounting for three-fourths of total dealings.
- In this quarter, 32 large deals amounted to $10.4 billion, compared to 34 deals worth $11 billion in the first quarter of 2024, and 34 deals valued at $10.1 billion in the last quarter of 2024.
Pure-Play Investments and Exits
Interestingly, pure-play PE/VC investments surged to $10.9 billion, which is a 62% increase from $6.7 billion in the first quarter of 2024 and 19% higher than the $9.1 billion recorded in the last quarter of 2024.
Exits also showed robust growth, totaling $8 billion in Q1 2025. This marks a 57% increase from $5.1 billion in Q1 2024, although it is slightly lower than the $8.3 billion seen in Q4 2024.
Fundraising Insights
On a positive note, fundraising activity experienced a significant uptick, rising 32% to reach $3.7 billion across 29 funds. This is a clear improvement compared to $2.8 billion raised by 21 funds during the same period last year.
In conclusion, while the data reveals a cautious outlook among investors, the growth in fundraising and pure-play investments indicates a resilient market poised for potential recovery as conditions stabilize. As always, staying informed of these trends is crucial for stakeholders in the evolving landscape of private equity and venture capital.
