Home >Opinion >Quick Edit >The great VC rush

One arena that seems to have defied the economic downturn is venture capital (VC) investments. A KPMG report shows that VC investment in India more than doubled in the third quarter of calendar 2020 to $3.6 billion, from $1.5 billion in the preceding quarter. This points to an expected upsurge in new forms of business activity, especially in technology or tech-enabled sectors, and bodes well for the future of our economy. Crisis times tend to cause a churn, throwing up new winners while discarding outdated business models. Many of the bets that VC funds place will fail, but the few that come good could generate a lot of value.

Much of the money that has come in appears to have gone to large businesses, while startups have got only a small proportion. What seems common to recipients, though, is their focus on digitally transformed markets. There is another point to ponder. The world is awash with investible funds, thanks to monetary easing in the West on a scale unseen in history. Bond holdings pay almost nothing, and stocks seem overpriced. This may have sent global investors scurrying for returns off relatively risky wagers. Let’s hope it all works out well.

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