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Private equity, venture capitals investment drops 27% in startup during April: Report

Investment by private equity and venture capital funds in startups have taken a downturn in April 2022. (iStockphoto)Premium
Investment by private equity and venture capital funds in startups have taken a downturn in April 2022. (iStockphoto)

  • According to a report by industry grouping IVCA and EY, investments into startups by venture capital funds have halved to $1.6 billion across 82 deals in the month under review - which resulted in pulling down of the overall number.

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A latest report said decline in bets on startups has led to drop of 27% year-on-year in the investment of PE/VE to $5.5 billion in April this year. However, the investment in startups grew by 11% from $5 billion the previous month, as per a report.

According to a report by industry grouping IVCA and EY, investments into startup by venture capital funds have halved to $1.6 billion across 82 deals in the month under review - which resulted in pulling down of the overall number.

On the other hand, the report highlighted that in April this year, investments classified as those for 'growth' recorded a three-fold jump from the year-ago period to $ 2.8 billion.

Also, in April, the largest deal saw Verse Innovations raise $805 million in a funding round -- the second-largest in the media and entertainment sector.

As per a PTI report, the consultancy's partner Vivek Soni acknowledged that rate tightening by the US Fed will reduce liquidity, but added that international funds are sitting on large amounts of dry powder and India can lead emerging market capital allocations because it is one of the few large economies with strong growth.

He added, "Downside risks that can temper growth expectations and PE/ VC investment activity include rising inflation, oil prices, dollar appreciation vs Indian Rupee and rising Indian interest rates."

During April, in the absence of large strategic and secondary deals - the exits remained muted at $1.2 billion as against $2.7 billion for the year-ago period. Adding the report stated that the ongoing volatility in capital markets will lead to a further push back for IPOs and reduce valuations.

Moreover, in the latest month, total fundraising of $1.5 billion was recorded across 16 funds - rising from the $569 million raised in the same month a year ago by eight funds.

The largest fundraise was by Elevation Capital which raised its eighth India-dedicated fund at $670 million.

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