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Early-stage startup deals declined significantly, with angel/seed and venture capital deals each down nearly 29% in FY24, a report said.

According to the India Invests (i2) report, an average of three private investment deals were finalised daily, although the overall deal count and value decreased by one-third compared to FY23.

The India Invests (i2) report is the sixth edition report by 360 ONE Wealth, formerly IIFL Wealth Management, in partnership with VCCEDGE.

It noted that public market deals and pre-IPO deals are close to their previous highs in terms of deal value, indicative of the resilience of these segments.

The report highlighted that deal activity slowed but transaction median value improved, surpassing the peak during FY22’s investment rush. The average value of companies remained strong, surpassing pre-pandemic levels, indicating continued private investor interest in the sector.

Regional shifts and sectoral trends

In terms of regional shifts, Maharashtra surpassed Karnataka in total investment inflow and the number of deals, with Mumbai leading the way. Delhi-NCR remained a key hub, while Bengaluru saw a drop in deal volume. Chennai rose to the fourth spot, replacing Pune.

Old economy sectors attracted more investments compared to struggling new economy sectors.

The report highlighted that information technology remained the top exit activity, with a total value exceeding $14 billion despite declining deal numbers, but “a 20% increase over the average.”

Deal activity in HR tech, prop-tech, edtech, healthtech, and travel-tech segments saw a sharp decline, with the number of deals halving. Fintech, media tech, and agritech also saw reduced activity. In contrast, logistics maintained its activity level, with funding nearly doubling.

“While there was a visible drop in the value and number of deals, across PE, startups, and M&As, the 41% increase in total exit value highlights the liquidity at hand and the potential for accelerated growth in FY25. Despite the number of startups that received funding dropped by 17%, on average, nearly three startups received a cheque every day from an angel investor or a venture capital fund,” Shah added.

M&A activity faces challenges

The report noted a sharp fall in M&A activity, with a total value reduction of 69% from FY23, influenced by high capital costs and macroeconomic uncertainties.

“While recent times have seen a fluctuating M&A landscape influenced by various macroeconomic and geopolitical factors, there is anticipation of a resurgence in deal-making as we progress into this fiscal,” said Yatin Shah, Co-founder of 360 ONE and Joint CEO of 360 ONE Wealth.

The report said that Telangana was upstaged by Tamil Nadu in M&A deal activity, claiming the fifth spot, and

surpassed Delhi in value to secure the fourth rank. Haryana surpassed Karnataka in M&A value. Meanwhile, Chennai matched Pune in deal volume and surpassed it in value.

“The global forecast for private capital in 2024 shows a notable optimism stemming from a more stabilised investment landscape. We expect a gradual uptick in mergers and acquisitions activity during FY25,” said Anirudha Taparia, Co-founder and Joint CEO, 360 ONE Wealth.

“With an exit value of $9.5 billion, open market transactions doubled, presenting opportunities for buyers and sellers and becoming the primary driver of exits for alternative investors. Investment via bridge funding surged by over 50%, even as early, growth, and late-stage funds saw their total funding amounts halving in FY24,” he added.