VC, PE firm launches slow as investors turn cautious

THE NUMBER OF new venture capital (VC) and private equity (PE) firms being launched in the country has plummeted in recent years, reflecting growing investor caution, tighter capital flows, and a shakeout of undifferentiated players in a maturing startup ecosystem.

- S SHANTHI

From 73 new VC firms in 2019, the number has dropped sharply to just 14 in 2024, according to Tracxn data. Not a single new PE firm was launched in 2024, compared to 21 five years ago.

This decline comes even as existing firms continue to raise new funds and global investors double down on India. The shift underscores a broader recalibration in how limited partners (LPs) deploy capital, with a clear preference for experienced fund managers and proven strategies. The more selective approach is driven by market headwinds, concerns over exit timelines, and the realisation that many of the firms launched during the recent VC boom failed to carve out a distinct value proposition.