Excl: IVCA gets new top team; Karthik Reddy of Blume Ventures to take over as chair, Ashley Menezes of ChrysCap is vice chair

The last couple of years have been unprecedented for the startup ecosystem in India, one where startups reached for the stars. VC funding hit a record $38.5 billion in 2021, with 44 companies joining the coveted unicorn club.

Yet after a historic year of turning India into the world’s third largest unicorn creator, venture investors for their part are not locking, but refilling their war chests. As per a Bain & Company and IVCA report, investing momentum in India is being driven by a pivotal convergence of tailwinds. Digital infrastructural fundamentals (e.g., cheap data access, UPI, eKYC via Aadhar) opened enormous economic opportunities that are increasingly being addressed by the deepening startup ecosystem in India.

"As a thriving startup economy, India is now entering an exciting phase of growth in the PE and VC ecosystem, which continues to fuel FDI and job growth in the country, the contribution being ever larger than before. The IVCA’s goals are aligned with the nation’s desire to grow rapidly and the most fundamental goal of the investments are to create digital infrastructure, efficiencies across value chains, and skill the nation into developing and adopting the latest technologies in the world, propelling the work force to becoming the most competitive in the world and creating millions of jobs for the country," Karthik Reddy, Chairperson of IVCA told CNBC-TV18.

With 228 members on board including top domestic and global PE/VC funds, LPs, Family Offices and other stakeholders, IVCA represents the India PE/VC industry at government, policymakers and regulatory authorities. Over the last few years, IVCA has worked with the policymakers on issues that impact the investment ecosystem in India. In fact, Union Budget 2022, announced the setting up of an expert committee for PE/VC Investors to address issues ranging from taxation to opening up large stock of domestic capital for AIFs and startups, supporting sunrise sectors and more. ​

Mobilising the large pools of domestic capital is going to be high on agenda for the new IVCA executive committee. This will be done through the Fund of Funds as well as by easing additional inflows from domestic and global investors.

“With the new expert committee announced in the Union Budget, we intend to work closely with the government on the existing regulatory matters. The current government and policymakers have been engaging with the industry body frequently and have acted on several pressing policy matters in the past, and together we intend to create a ‘frictionless economy’, accelerating the 2047 goals for the country,” Reddy added.

IVCA’s new executive committee consists of a panel of investors who have and are helping build some of the most innovative and successful businesses in India like Prashanth Prakash of Accel Partners (Swiggy, Urban Company, Vedantu, Amagi), Sequoia India’s Rajan Anandan (Surge, Polygon, Mamaearth, Rebel Foods), Sandeep Naik of General Atlantic (BYJU'S, Unacademy, Pine Labs), Vineet Rai of Aavishkaar Capital (AgroStar, Vortex GoBolt), Nipun Sahni of Apollo Global Management, 3one4 Capital’s Siddarth Pai (Licious, DarwinBox) and Amit Jain of Carlyle India Advisors.

Everstone Group​'s Pratibha Jain, Rema Subramanian of Ankur Capital (CropIn, Captain Fresh, Niramai), Padmaja Ruparel of IAN Fund (Druva, Wow Momo, FarEye) and Rochelle D’Souza at Lighthouse Funds (Nykaa, Capital Trust, Kama Ayurveda) also join the committee.

Even as the Indian startup ecosystem reached an inflection point in maturity in 2021, fuelled by VC investments, global headwinds are likely to affect the funding outlook for the rest of 2022, according to the Bain & Company-IVCA study.

While investments in 2022 will remain in a similar range as 2021, the pace and quality of deals is likely to shift. A more measured pace of deal-making could see investors doubling down significantly on quality assets with larger rounds.

Exits via public listings may also witness some moderation as IPOs in the pipeline may adopt a wait-and-watch stance given global headwinds in public markets.

Some India-specific trends may further affect momentum in 2022 including stricter IPO norms that are expected to be rolled out by SEBI, specifically focused on capping investor share offloading at IPO. Regulatory shifts are likely to continue to affect a few sectors such as online gaming, cryptocurrency, and fintech and lastly talent attraction and retention will continue to remain top of mind for scaling startups, the report said.