Amid geopolitical tensions and seasonal downturns affecting global venture capital (VC) investment, the Indian VC market remained robust, attracting $3.6 billion. This growth was bolstered by several successful fundraising rounds from consumer-oriented businesses, according to a report by KPMG.
In contrast, global VC investment declined significantly, falling from a five-quarter high of $95.5 billion in Q2 FY24 to a nearly seven-year low of $70.1 billion in Q3 FY24.
The substantial funding rounds in India were predominantly led by business-to-consumer (B2C) companies, unlike other regions where business-to-business (B2B) firms attracted the majority of VC investments. While fintech companies continue to capture significant interest in India, investors have grown more cautious in recent quarters, as traditional banks increasingly roll out their in-house fintech solutions aimed at serving the large unbanked and underbanked populations, the report stated.
The resurgence in VC activity is expected to continue, as noted by Nitish Poddar, Partner and National Leader, Private Equity, KPMG in India. He indicated that this trend is likely to persist, with investors aligning with a clear path to profitability and strong growth trajectories characterized by high levels of customer engagement.Lucknow Stock
Globally, the Americas continued to attract the largest share of VC investment in Q324, although total investment in the region fell from $58.6 billion in Q224 to $41.4 billion in Q324. Meanwhile, funding in Asia declined from $18.5 billion to $15.6 billion quarter-over-quarter (QoQ), and Europe saw a drop from $17.9 billion to $12.5 billion.
Shift in investor preferences.
While AI continued to garner significant interest in Q324, with six of the ten largest deals during the quarter, Conor Moore, Global Head of KPMG Private Enterprise at KPMG International, observed a shift in investor preferences. He explained that investments in AI are currently experiencing a downturn, marked by a trend toward smaller deals. “This shift indicates a move away from core AI companies specializing in large language models (LLMs) and toward those providing highly targeted industry solutions. Notably, defense technology has emerged as a significant winner this quarter, alongside biotech,” he said.
Exit activity in Asia increased from $11.2 billion to $18.2 billion quarter-over-quarterJaipur Stock. In contrast, exits in the Americas dropped from $25.4 billion to $11.2 billion, while Europe saw a decline from $16.3 billion to $9.8 billion. The report further noted that global fundraising is lagging behind the pace needed to match even 2023’s subdued total of $202.8 billion. By the end of Q3 FY24, global fundraising amounted to $143.1 billion.Kolkata Stocks
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