Green shoots are appearing in startup investing after a downturn, leading to a shift in how founders and dealmakers approach potential transactions. Domestic firms and family offices are becoming active investors, while global and crossover funds are staying away. Public market investors are finding value in venture-backed private assets, contributing to the growing domestic pool of capital. Investment banks are also playing a bigger role in facilitating deals. The funding scenario remains subdued, but industry insiders believe the pipeline will grow as startups grow into their valuations from the previous boom years.
Foreign fund flows into India through an obscure offshore derivative called participatory notes are increasing, with investments in Indian stocks, bonds, and hybrid securities reaching 1.43 trillion rupees ($17.3 billion) at the end of January. This surge in investment comes despite stricter disclosure requirements imposed by regulators to verify client identity. The rise is driven by India’s growing stock market, which is attracting investors seeking alternatives to China. However, authorities remain cautious about participatory notes, due to concerns about potential money laundering.
