Venture Capital in India grew by 261% in 2014



Startups in India are increasing every year and at the same time venture capital firms also increasing. Venture Capital in India has registered a phenomenal growth at the rate of 261% in 2014 and scaling new heights touched $3.81 billion, according to a study from Privco. With the increase in internet penetration in India, the greater percentage of the Indians being active over internet, venture firms are eyeing India as the market to watch out. Heavy population in India is always seen as one of the major barrier in the way of socio-economic growth and now become USP-attracting the investors like never in the past.

It is no wonder that venture capitalists and investors are choosing India as their destination and taking keen interest in developments. Matt Turlip, a Senior Analyst for financial data firm Privco said that,

[quote]If you look at the India’s growth and demographic, you can see it as the next hot tech market after China is India[/quote]

The funding for the Indian startups has been falling for the last two years i.e, from $2.29 billion in 2011 to $1.51 billion in 2012 and even poorer $1.07 billion in 2013, but now it touched to $3.86 billion in 2014 and major part of this capital goes to Japanese VC firm, SoftBank. In spite of the huge 261% increase in the Venture Capital investment for 2014 and $3.86 billion looks very less when compared to $30-40 billion venture capital funding in US.

Earlier, Venture Capital funding in the Indian startups has taken five years to get doubled and touch figure of $1.4 billion in 2012, from $60 billion in 2006. The major part of the investment came from Japanese VC firm SoftBank. There are various factors which explain the VC firms interest in Indian startups and faith in Indian economy.

  • Over next three-four years, more than 500 million people in India will have access to the internet. This rapid growth of internet access in India will create the revolution which will make dotcom seem lame, said by the Vivek Wadhwa, an Indian-American academicians.
  • Within next 35 years, India will overtake China to become the most populous country in the world and also the largest economy too, due to which huge volumes of the business will be done in India.
  • India is the second largest mobile market in the world with more than 900 million smartphones. Majority of the already connected internet users in the country are less than 25 years. This makes them ideal targets to the online retailers explaining why the eCommerce companies in India are attracting funding like never before.
  • Online retail is expected to touch $6 billion in 2015 and $50-70 billion by 2020 and $500 billion by 2050.