India to witness stagnant VC investment in Q1 2023: KPMG report

According to the KPMG a Private Enterprise Venture Pulse' report, VC investment in India remained slow quarter over quarter as VC investors, primarily from the United States, continued to take a wait-and-see approach due to global macroeconomic uncertainties.

According to the report, VC investment in agri-tech in the country is expected to increase significantly over the next 12-24 months as startups in the space mature and attract larger funding rounds.

"There's so much entrepreneurship in India and investors see this. A lot have been betting on micro-funds as a way to get their feet on the ground to identify diamonds early -- and this has really worked well for some larger VC funds," said Nitish Poddar, Partner and National Leader, Private Equity, KPMG in India.

Meanwhile, global venture capital (VC) investment fell for the fourth consecutive quarter in Q4 2022, falling from $102.2 billion on 9,767 transactions to $75.6 billion on 7,641 transactions.

According to the report, the decline occurred despite large deals in the energy sector, including alternative energy vehicles, battery technologies, and alternative power generation and distribution technologies, as governments seek to secure energy independence while meeting their climate obligations.

Despite attracting three $500 million+ mega deals throughout the quarter, the US recorded the highest percentage of investment, followed by Asia.

"Globally, we continue to see downward pressure on valuations in early 2023, leading many companies to postpone fundraising efforts in hopes of better times ahead," said Jonathan Lavender, Global Head, KPMG Private Enterprise, KPMG International.

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