TLDR:
- Indian venture-capital firms are facing challenges with their first funds reaching the end of their lifecycle.
- Firms are struggling with few good assets, discount-seeking investors, and regulatory pressures.
Analysts are closely watching the return multiples that these investments will deliver, as only a handful of firms have fully returned capital to their investors. The preferred exit route is through secondaries, where VCs look for new investors to buy their stake in portfolio companies. The current market is flooded with such opportunities. However, dealing activity has decreased compared to the peak in 2021, as fundraising levels fell. The regulator, Securities and Exchange Board of India (Sebi), is insisting that funds stick to their life cycles, creating additional challenges for these VC firms.
Overall, Indian VCs are facing pressure to exit their inaugural funds with strong returns while navigating complex market conditions, investor demands, and regulatory requirements.
