India-focussed PE funds raise new rounds for investing in startups

Bengaluru, 25 May India-focussed private equity firms are betting big on technology-powered startups and enterprises as they close large rounds of funding. This came at a time when severe funding winter has crippled growth of Indian startup ecosystem.

On Wednesday, one of the marquee fund houses Matrix Partners announced that it has made a final close of its latest India fund at $550 million. Interestingly, this is the largest round of fund raised by the funs house for India since starting its operations in 2006 in the country.

The backer of startups like Ola, Razorpay and OfBusiness among others, the fund house will continue to participate in the series-B round of funding of various companies with a ticket size varying from $1-15 million.

Similarly, Infosys’ founder NR Narayana Murthy’s Catamaran Ventures has also decided to bet big on Indian startup ecosystem with manufacturing in its radar.

The fund house plans to invest around $1 billion in various startups as India is all set to emerge as the next manufacturing hub of the world as China plus one plays out across the world.

The fund house is looking at emerging themes such as deep tech, precision engineering, manufacturing and renewables as the areas in which it will take maximum bets.

In the first quarter of 2023, startups in India raised about $5.5 billion, down 66% from $16 billion in the same period a year ago. In 2022, venture capital firms invested $46 billion in India, down 29% from the record high of 2021.

A dearth of funding has led to mass layoffs by the domestic startups with more than 25,000 people losing their jobs in the last one year. Experts are of the opinion that the recovery in startup funding is still some quarters away as global economy goes through a slowdown.

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