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December 18, 2016

US Fed rate hike: Indian start-ups will still find enough capital: Mint

Extract from Mint Article

Will the Fed Hike affect Venture Capital flows to India?

“India is a growth bet. Not a cost of capital bet for limited partners and, therefore, I don’t expect material change in allocations outside the short-term sentiment,” - Avnish Bajaj, MD, Matrix Partners India.

Parag Dhol, Inventus and Rajesh Raju, Kalaari Capital believe that interest rates need to go up a few percentage points (not basis points) for it to affect flows to India.

Given the small share of India's Venture Capital in overall allocation by global LPs, the effect would be minimal. While startups looking for Seed to Series B would be able to raise funds, those raising in later stage funding could find it difficult.

The Mint article by @getsnigdha quotes Venture Intelligence data on VC Investments by Hedge funds and Mutual funds in India.
In 2014 and 2015, such investors, more hedge funds than mutual funds, poured more than $7 billion into venture capital-backed start-ups, according to data compiled by Chennai-based research firm Venture Intelligence. Their presence started to wane during the last quarter of 2015 on account of volatility in public markets following the devaluation of the Chinese yuan. This year, investments by hedge funds and mutual funds in startups stood at just under $500 million.

Venture Intelligence is India's longest serving provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India.