October 2024 painted a mixed picture for private equity (PE) and venture capital (VC) investments in India. The overall funding grew by 4% compared to that of 2023 and reached to $4.7 billion. Startup investments witnessed a sharp 50% drop and raised $880 million across 56 deals. It is a significant decline from $1.8 billion across 42 deals in October 2023 as per the IVCA-EY monthly PE/VC report.

October showed a 21% rise in deal volume compared to the same month in 2023 equipped with 91 deals compared to 75 previously. Large PE/VC deals valued at more than $100 million remained a highlight and they totalled to $3.3 billion across nine transactions. Some of the major moves in the deals were Temasek acquiring an 18% stake in VFS Global Services from Blackstone for $950 million and its $200 million investment in Rebel Foods.

Experts pointed out the startup struggle to a shift in investor focus. Vivek Soni, Partner and National Leader for Private Equity Services at EY, said that mature companies are lately becoming more attractive to investors as such businesses offer more predictable returns as well as a balanced risk profile. Investors are treading cautiously amid rising inflation, rupee depreciation and weaker corporate earnings.

Concerns like market volatility and bid-ask gaps in private transactions are making investors more selective even though the last quarter of the year began with strong growth compared to September 2024. Soni predicts a slower pace of investments in the coming months equipped with fewer PE-backed IPOs and open market exits if the volatility in mid-cap and small-cap stocks persists.

Exits also took a hit in October equipped with PE/VC-backed companies seeing only $1.1 billion across nine deals. It was a 40% drop from $1.9 billion last year. Secondary exits dominated and it accounted for 96% of the total exit value.

The sharp decline in startup investments highlights a clear shift in priorities.