Investments into startups by venture capital funds halved to USD 1.6 billion across 82 deals during April, which resulted in pulling down of the overall number.
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.
“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,” he added.
During April, investments classified as those for ‘growth’ were three times higher than the year-ago period at USD 2.8 billion, the report said.
The largest deal in the month saw Verse Innovations raise USD 805 million in a funding round — the second-largest in the media and entertainment sector, it said.
In the absence of large strategic and secondary deals, exits remained subdued at USD 1.2 billion as against USD 2.7 billion for the year-ago period, the report said, adding that the ongoing volatility in capital markets will lead to a further push back for IPOs and reduce valuations.
April recorded a total fundraise of USD 1.5 billion across 16 funds, compared to USD 569 million raised in the year-ago period by eight funds.
The largest fundraise was by Elevation Capital which raised its eighth India-dedicated fund at USD 670 million, it said.