IPO markets emerging as exit routes for startup investors amid evolving ecosystem
The Indian startup ecosystem experienced a rollercoaster ride in 2024, characterised by a slight-yet-concerning decline in funding activity and a shift in investor sentiment, alongside a silver lining with several startups achieving unicorn status.
Despite facing global economic challenges, India’s startups showcased remarkable resilience, adeptly navigating changing market conditions, while continuing to attract investments.
The Indian startup ecosystem has undergone a dynamic evolution over the past decade, with major changes reshaping how private equity (PE) and venture capital (VC) firms strategise their exits from startups.
Traditionally, Indian stock markets were perceived as places for large, established companies to list and raise capital. However, they are now offering diverse opportunities for new-age startups to tap into public funding and provide impressive exits for early backers and investors, such as angel investors and venture capital firms.
According to a Bain & Company report, despite the slowdown in dealmaking, 2023 emerged as a marquee year for Indian exits. Exit value soared by 15% to USD 29 billion, accompanied by a rise in exit volume from 210 to 340 exits. Notably, public market sales (primarily block trades) comprised half of exits by value. In a testament to the strength of the market, Bain & Company's report highlights that Indian public markets have outperformed those of most major economies, with a significant increase in domestic investor participation, both retail and institutional, across sectors and companies.
