Overall venture capital (VC) fund exits in Indian start-ups surged over 10 times to cross $14 billion in 2021 in comparison to the previous year, according to a report by Bain & Company.
Anchored by a few marquee deals, the exits accounted for around 60 per cent of the total exit value. This included BillDesk's acquisition by PayU for $4.7 billion, Paytm's $2.5 billion initial public offering (IPO), and Zomato's IPO debut of $1.3 billion.
VC exits through IPOs constituted a robust 40 per cent of the overall exit value in 2021, while secondary sales were anchored by a few large deals, as per the report.
Five high-profile IPOs in 2021, accounting for $5.3 billion (of total IPOs value of $16.1 billion), had VC exits, it added.
Secondary and strategic sales continued to be the mainstay for exiting VCs, with more than 60 deals amounting to $8.7 billion or 60 per cent share of overall VC exit value.
Growing interest from global investors and PEs in growth-stage deals was a key driver of the buoyant secondary market.
The report further added that the year 2021 also saw significant participation from traditional PE funds in growth equity deals. It noted that India witnessed significant participation from several global and domestic investors in 2021, taking its active investor count to 665, from a base of 516 in 2020.
Several seed funds raised significant funds in 2021 (more than $30 million fund sizes; e.g., Eximius Ventures, Atrium Angels).
The fundraising landscape witnessed a marked shift as smaller funds raised a higher share of capital in 2021 relative to leading Tier 1 investors, the report stated.
Share of investments by incumbent leaders remained stable at around 25 per cent in 2021. Tiger Global and Sequoia Capital continued to retain the top spots in terms of investment value and volume, while SoftBank made a few selective large deals, remaining on the leaderboard in terms of investment value.
The shape of the dealmaking landscape, however, underwent a dramatic shift as top investors such as Tiger, SoftBank, and Alpha Wave Global (erstwhile Falcon Edge Capital) had more than 60 per cent of their deals in the $50 million-plus size bracket.
"Traditionally VC-focused investors, Sequoia and Accel, continued participating actively in
VC investments in India had a banner year in 2021, with a meteoric 3.8X growth over 2020, to reach $38.5 billion in capital deployed.
Remarkably, the share of VC deal value within overall PE-VC investments surpassed 50 per cent for the first time, according to the report.
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