India’s venture capital landscape experienced remarkable growth in 2024, with funding reaching an impressive USD 13.7 billion, marking a 43% increase from the previous year. This surge was propelled by a 45% rise in deal activity, tallying 1,270 transactions and solidifying India’s status as the second-largest venture capital market in the Asia-Pacific region, according to a recent report from Bain & Company and the Indian Venture Capital Association (IVCA).

Significant Surge in Deal Volume

The dynamics of the VC ecosystem have shifted significantly, with small- and medium-sized deals (under USD 50 million) representing nearly 95% of all transactions, increasing by 1.4 times. Meanwhile, larger deals, specifically those surpassing USD 50 million, nearly doubled in volume, returning to pre-pandemic levels as investors gravitated toward high-quality assets. Notably, megadeals (valued at USD 100 million) also saw a 1.6-fold increase, reflecting a renewed investor confidence in resilient companies that successfully navigated the funding challenges of the past two years.

Sector-Specific Funding Highlights

Key sectors such as consumer technology, software and SaaS, which includes generative AI, and fintech attracted over 60% of the total funding. Leading the charge, consumer technology secured USD 5.4 billion, more than doubling its figure from 2023. The report highlights substantial investments in areas like quick commerce, edtech, and B2C commerce, with standout companies such as Zepto (USD 1.4 billion), Meesho (USD 275 million), and Lenskart (USD 200 million) leading the way.

• Top Sectors for Funding:
  • Consumer Technology: USD 5.4 billion
  • Software and SaaS: USD 1.7 billion
  • Fintech: Significant market presence

Government Initiatives Foster Growth

The Indian government’s proactive measures, including the removal of the angel tax, lower long-term capital gains (LTCG) tax rates, simplified registration for foreign venture capital investors, and the elimination of the National Company Law Tribunal (NCLT) process, have created a more conducive environment for startups and investors alike.

Rajat Tandon, President of the IVCA, remarked, "The policy reforms in 2024 have enhanced investor confidence, paving the way for a vibrant 2025. With available capital, we expect a surge in deal activity, particularly in growth-stage investments, which will continue to fuel strong consumption trends and support the evolving digital economy."

Improved Exit Environment

India’s exit landscape saw significant improvement in 2024, with exit values soaring to USD 6.8 billion. Public markets played a pivotal role, contributing three-quarters of this total. The number of IPOs surged nearly sevenfold, as numerous venture-backed companies successfully entered the public domain, bolstering India’s image as a maturing startup ecosystem.

Prabhav Kashyap, a Partner at Bain & Company, notes, "India’s VC ecosystem is set for sustained growth, driven by consumption trends, progressive policies, and rapidly advancing digital infrastructure. Emerging sectors such as semiconductors, energy transition, and deep tech are likely to attract increased interest, supported by the emergence of funds focused on these areas."

Conclusion

In summary, India’s venture capital landscape is thriving, characterized by substantial funding increases, a supportive policy environment, and a promising exit landscape. As the country positions itself as a leader in the Asia-Pacific venture capital scene, the future looks bright for investors and startups alike.