Growth of Venture Capital and Private Equity in India

Abstract

Venture capital and private equity (VCPE) investments have been evolving as a potential source of corporate finance, forming a part of India’s emerging story. The role of VCPE investments in fueling business creation, innovation, and growth in India cannot be understated. Through an enabling regulatory environment and favorable macroeconomic indicators, India went through many life stages in the growing trends of VCPE investments before reaching its present level of importance today. This study analyzes the factors affecting the growth trends of VCPE investments in India from 1998–2016 in terms of the value of investments and number of deals and the penetration of VCPE investments across various industries in India. At the current pace of development of equity, bonds, external commercial borrowings, and bank credit pools, VCPE investments will have to double in order to fund the government’s growth targets.