Venture capital in India is expected to invest $10 billion in 2024, according to Blume Ventures' Karthik Reddy. That compares with a muted $7.5 billion invested so far in 2023.
"If you strip out the crazy numbers of 2021 and 2022, the numbers are not way off, compared to 2019 and 2020," said Reddy, co-founder at Blume Ventures and chairperson of the Indian Venture and Alternate Capital Association. "Essentially, what created the spike has gone away. But the consistency in terms of growth has been there. It has been flat, but 2023 was meant to be that kind of year."
"For 2024, we're more optimistic; it's the case of the proverbial wheat separating from the chaff," Reddy told NDTV Profit at the sidelines of the conclave.
"All the problem cases are getting surfaced; they're getting addressed. Some might die, some might go bankrupt, and some might have downturns, but they'll fix themselves. So what didn't get cleaned in 2023 will get cleaned in 2024. When this happens in venture capital, it clears the air, and people know what exactly they're buying at what price," he said.
Even with potential downturns incoming, Reddy added that price resets are not easy.
"It's never been seen in venture capital for 15 years; other than Flipkart's downround in 2016 and Ola's back then, there's been very few that have taken massive downrounds; that's only happened in the last two years. So we haven't finished that cycle, and when that happens is when capital comes confidently, and that will begin to happen during the second half of 2024," he said.
Reddy said excitement, actions and conversations in the first two months of 2024 have been at their peak.
"Even in today's event, overseas investors that haven't come for 3–4 years. India is the new frontier market for them, where they need to spend more time and investment. We won't get the same capital, but it will be replaced. Perhaps we won't get a Tiger Global coming in as aggressively, but Softbank is starting again. You will have other pools in Asia reorganising themselves. For example, if they had a China combined pool, they'd have to separate that so that the regulator and the government are okay looking at a standalone India-dedicated pool," he said.
On the private equity side, Reddy said dealmaking has been robust. "They're taking the torch for capital raises. From what I'm hearing, the best funds in India are getting oversubscribed. Committed capital for private equity will be at an all-time high this year for dedicated India funds. Both put together, India is an important platform."
However, Reddy added that the ecosystem needs to get its act together and deliver on exits.
"So unless we start churning out IPOs, because I don't expect mergers and acquisitions to be as strong in terms of cash outcomes, the big cash will only come from IPOs. I'm hoping we get our act together in the next 24 months and push out a lot of IPOs that generate cash. Like recently, Fireside has something from Mamaearth; these sort of $50-100 million exits from IPOs are important for the ecosystem to start seeing a lot more commitments," he said.
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