Investments by private equity and venture capital funds fell by almost a third to $54.2 billion in 2022, which was characterized by a “funding winter” after years consecutive increases. Even after the decline, the year was the second best for India in terms of bets taken by long-term investors on Indian growth companies, according to a report by industry lobby Ivca and consultancy firm EY.

Investments in value were down 29% from $75.9 billion in 2021, while in volume there was a 4.6% drop to 1,211 deals from 1,269, according to the report. adding that a sharp decline in large deals drove the decline.

Company partner Vivek Soni said investor interest had been weighed by inflation concerns, recession fears, rising cost of capital and high levels of uncertainty related to geostrategic challenges.

He added that 99 funds dedicated to India raised $17.4 billion in 2022, and there is a high level of dry powder available globally, which has the potential for a rebound in the market. activity.

“We expect the startup space to continue to see strong investment, albeit at lower valuation multiples than 2021. Indian PE/VC investment in 2023 is highly likely to be significantly higher than 2022 levels,” he said.

Factors to watch ahead include headwinds like recession in the developed world, re-emergence of inflation, any outbreak of geopolitical conflict, and potentially new and infectious variants of COVID-19.

In 2022, the financial services sector registered the peak interest both in value at $10.8 billion and in terms of volume with 249 transactions, according to the report.

On the outflow front, there was a 55% drop to $18.3 billion via 249 deals, he said, pointing to a lack of large strategic and secondary deals as the cause.