VC investments in India decline to $216 million in 2016: report

The VC investment fell mainly due to the lack of mega-deals as actual deal volumes in India remained steady, says the KPMG report


Last year, the venture capital investments amounted to $1.6 billion in the previous year. Photo: istockphoto
Last year, the venture capital investments amounted to $1.6 billion in the previous year. Photo: istockphoto

New Delhi: Venture capital investments in India witnessed a significant decline in 2016, with just $ 216 million in funding, compared to $1.6 billion in the previous year, says a KPMG International report.

The decrease was largely due to the lack of mega-deals as actual deal volumes in the country remained steady over the same period.

“Despite the decline, India appears to be a key focus of VC investors in Asia. The demonetisation efforts in the fourth quarter of 2016 resulted in an increase in transactions for both payments companies and mobile wallet providers,” the report said.

It further noted that corporate interest in fintech is also expected to rise in India over the next year. “With the demonetisation effort that started in the fourth quarter of 2016 in India, there has been a big increase in the number of transactions managed by both payments companies and wallet providers. As this effort continues, we should see momentum grow for digital platforms and fintech solutions,” Neha Punater, head of fintech, KPMG in India said.

According to KPMG International’s quarterly report on global fintech investment, the total 2016 fintech funding declined to $24.7 billion from $46.7 billion in 2015, while deal activity dropped from 1,255 to 1,076. Though there was a decline in merger and acquisitions (M&A) and private equity (PE) fintech deals in 2016, venture capital (VC) investments reached a new high with a record $13.6 billion of investments.

“Looking ahead to 2017, with implementation of the revised Payment Services Directive (PSD2) rapidly approaching in Europe, and growing pressure for real-time payments and open banking all over the world, there will no doubt that some exciting developments coming down the pipe,” Warren Mead, global co-leader of Fintech, KPMG International and Partner, KPMG in the UK said.

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