Wealth 360 One Report: Slowdown In Private Equity Investment Deals In 2023-24

This year has seen a thriving business of striking deals in the country, with an average of three private investment deals being finalized daily. However, compared to the financial year 2022-23, both the number of deals and their total value have decreased by one-third.

This decrease is also significant compared to the peak observed in 2021-22 when investment professionals were actively competing to invest, with six companies securing funding each day.

According to a report titled ‘India Invests’ by Wealth 360 One, private investment has undergone a correction, with funding from investors, particularly venture capital firms, decreasing since the surge three years ago, coinciding with the peak of the pandemic.

Wealth 360 One, however, expressed optimism when analyzing the deal-making activity in the latest quarter.

“Although there was a further decline in both the number of deals and the total funding amount, bankers were optimistic that the slowdown would soon stabilize,” the report read.

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Startup funding in India saw a 17 percent decline in 2023-24 compared to the previous year. In 2021, investment professionals were averaging six deals daily, but by 2024, this figure dropped to three.

The report underscores that larger deals, exceeding USD 25 million, typically indicative of a startup’s growth, have also decreased. This suggests a reduced overall investment in startups, particularly in medium to large-sized deals.

Late-stage venture capital investments have also been adversely affected. This year, startups raised nearly USD 8 billion from investors, marking a 50 percent decrease from 2022-23.

According to data from the Ministry of Commerce and Industry, India boasts 111 unicorns with a collective valuation of USD 349.67 billion. Among these, 45 unicorns with a total valuation of USD 102.30 billion emerged in 2021, followed by 22 unicorns valued at USD 29.20 billion in 2022. However, only one unicorn emerged in 2023.

The report highlights that consumer-focused sectors and technology are encountering significant caution from investors, resulting in a notable decline in both the number of deals and the total investment amount. Conversely, the industrial and materials sectors are maintaining stability, while sectors like financial services and healthcare are performing better.

“The broader decline in dealmaking didn’t affect all sectors uniformly. Industrials were almost at the same level, and materials reported more transactions in the financial year 2023-24. The financial services sector was on the verge of reaching its previous level. Healthcare, too, showed spark, but deals in consumer-focused sectors and tech dropped,” the report noted.