India's venture capital funding rises 43% to Rs 1.19 lakh crore in 2024

New Delhi: India's Venture Capital (VC) ecosystem exhibited robust growth in 2024, with funding surging 43 per cent year-on-year to Rs 1.19 lakh crore ($13.7 billion), according to a report.

This recovery was fuelled by a 45 per cent rise in deal activity, with 1,270 transactions recorded, reinforcing India's position as the second largest market for venture capital and growth funding in the Asia-Pacific region, the report by Bain & Company and IVCA said.

"Small- and medium-ticket deals (< $50 million), which made up around 95 per cent of the deals, increased by 1.4x, whereas $50 million+ deals nearly doubled, rebounding to pre-pandemic levels as high-quality assets attracted deployments. Megadeals ($100 million+) also rebounded with 1.6x increase in volumes as investors backed high-quality companies that successfully weathered the two-year funding winter," it said.

The report noted that the consumer technology, software and SaaS (including generative AI), and fintech sectors attracted over 60 per cent of the total funding.

Consumer technology emerged as the frontrunner, securing $5.4 billion in funding, more than doubling compared to 2023.

"The sharp growth was driven by significant investments in quick commerce, edtech, and B2C commerce, with companies such as Zepto ($1.4 billion funding in 2024), Meesho ($275 million), and Lenskart ($200 million) securing major funding rounds," the report said.

Software and SaaS funding (including generative AI) sustained funding momentum, rising to $1.7 billion, fuelled by customer spending on development and testing tools and maturing international go-to-market strategy playbooks.

Government initiatives such as eliminating the angel tax, reducing long-term capital gains (LTCG) tax rates, simplifying foreign venture capital investor (FVCI) registrations, and removing the National Company Law Tribunal (NCLT) process have created a more favourable environment for startups and investors.

"The policy reforms introduced in 2024 have bolstered investor confidence, setting the stage for a dynamic 2025. As dry powder remains available, we anticipate increased deal activity, particularly in growth-stage investments, fuelling strong consumption trends and supporting an evolving digital economy," said Rajat Tandon, President, Indian Venture and Alternate Capital Association (IVCA).

Further, India's exit environment improved significantly in 2024, with exit values reaching $6.8 billion. Public markets were the primary driver, accounting for three-quarters of this value. IPOs experienced a nearly sevenfold increase, as several venture-backed companies successfully went public, bolstering India's reputation as a maturing startup ecosystem.

"India’s VC ecosystem is primed for sustained expansion, fuelled by consumption tailwinds, progressive regulations and rapidly advancing digital infrastructure. Green shoot sectors such as semiconductors, energy transition and deep tech are poised to attract heightened interest and support, as evidenced by the emergence of several funds focused on these themes," said Prabhav Kashyap, Partner at Bain & Company.