A Life-Cycle Analysis of VC-PE Investments in India

Abstract

The venture capital and private equity industry in India has grown significantly since 2004. Using data from the years 2004–2008, the life cycle analysis provides findings that can impact the long-term growth of the industry. The author’s results indicate that a large proportion of the deals are round 1 investments with a dramatic drop in subsequent investment rounds. Most investments are in late-stage financing and take place many years after the incorporation of the investee firm. The industry is also characterized by the short duration of the investments. To ensure long-term growth of the industry in India, more investments should be made in early-stage financing, investors should stay invested for a longer duration, and larger rounds of funding should be made in the portfolio companies.

TOPICS: Private equity, emerging, quantitative methods, portfolio construction