The VCCircle Survey of venture capital confidence for 2015 found that the next five years are likely to be a period of great bull run for startups.
VCCircle surveyed venture capitalists (as opposed to private equity investors whose sentiment we measured here) on how they see the next 12 months for VC investments, which sectors they like to invest, whether valuations are high and how they prefer to exit. The survey polled about two dozen general partners from venture capital firms, which included large funds managing upwards of $1billion, mid-sized VC firms, and also micro VC funds which provide angel funding in Series A deals.
The investors see more dollars flowing into consumer internet (non-ecommerce), consumer services/products, enterprise/SaaS and mobile internet/technology sectors. VCs also expect sectors like agriculture, logistics, cold chain management, healthcare, financial services, ecommerce and technology enabled businesses to elicit more investor interest.
While the allocation of limited partners (LPs), the institutions which invest in private equity and venture capital funds, towards the early stage space did not ease till recently, with a few exits to showcase, GPs are now confident that LPs’ allocations towards the region will significantly increase. There is a clamour among emerging markets investors for exposure to early stage Indian tech firms.
There is a huge optimism among VCs this year, which is in contrast to somewhat muted or negative confidence among early stage investors last year.
So, what has really changed? For one, the change in the government at the centre, coupled with an improved macroeconomic environment, has turned around the sentiment. Second, VCs have started seeing exits, while some of the world’s most well known tech investors (like DST and SoftBank) have entered India with large exposure in Indian ecommerce and internet space. Besides, homegrown leaders like Flipkart, Snapdeal and Ola Cabs are snapping up rivals or innovative startups thus deepening the tech startup ecosystem.
The survey also finds that, aided by a renewed enthusiasm in macro-economic environment, 2015 will prove to be a good vintage year and a great year for exits. See the results: