More startup capital for India than China! Is that a reason for markets to smile?

Startup capital has surprisingly emerged as the new sparkle for stimulating the old economy. In July, something sensational happened in VC funding. For the first time in many years, VC investments in India outpaced that in China.

According to a Bloomberg report, Indian startups raised nearly $8 billion in July while funding to China fell below $5 billion. Is it a one-month wonder or early signs of things to come? Only time will answer that question.

Nevertheless, it is an milestone for Indian VC investments. Though the jump in India’s July numbers could be coming from catalysts such as China tech crack-down and Zomato’s bull run, the broader trend in VC-PE investments, too, has seen a sharp uptick in 2021.

Year to date (July end), this number is up by over 50 per cent at $36 billion (see chart below). If the trend continues, for the first time ever, VC-PE investments could be closing near $60 billion this year. That is 2 per cent of GDP. Not to forget, it was less than 1 per cent in 2017, not very long ago.

What is more exciting is, within the VC-PE flows, the share of VC funding has been moving up sharply as can be seen in the chart.

Read more at: https://economictimes.indiatimes.com/markets/stocks/news/more-startup-capital-for-india-than-china-is-that-a-reason-for-markets-to-smile/articleshow/85829317.cms