The outlook for the Indian private equity and venture capital market appears positive this year compared to last year as “normality” has returned to investors’ lives, said Anuradha Ramachandran, managing partner, TVS Capital Funds.
Pandemic outbreak
Ms Ramachandran said there was a funding glut in 2020 and 2021 as both investors and business owners got carried away. The pandemic has caused structural problems. Edtech boomed because students couldn’t go to school and required digital education, while consumer goods had to be purchased mostly online, so B2C ventures did well.
“The question now is how to sustain economic growth when structural flaws no longer exist. This is a puzzle that both investors and companies have always faced and continue to face,” she added.
Back to normal
Ms. Ramachandran observed that there has been a “normalization” among investors and entrepreneurs, so talks are now getting better due to realistic expectations on both sides.
“This scenario will accelerate the development of the domestic financing market. We hope that from now on it will be easier for both parties,” she commented.
The financing winter began a few years ago when many global funds halted their investments in India due to lack of availability of private funds coupled with global economic uncertainty.
“But India is an attractive market in itself and we are indeed attracting early-stage capital. However, in terms of return on capital, our financing markets have not yet matured,” she noted.
Credit aversion
Regarding lending to women, she said, “women are averse to credit and are very responsible, although the opportunities available to them may be fewer, which may also be one of the reasons why fewer women become entrepreneurs. However, it is encouraging that some start-ups have women as co-founders,” Ms. Ramachandran said.
