IPO markets emerging as exit routes for startup investors amid evolving ecosystem
Indian startup ecosystem has undergone a dynamic evolution over the past decade, with major changes reshaping how private equity (PE) and venture capital (VC) firms strategise their exits from startups.
Traditionally, Indian stock markets were perceived as places for large, established companies to list and raise capital. However, they are now offering diverse opportunities for new-age startups to tap into public funding and provide impressive exits for early backers and investors, such as angel investors and venture capital firms.
The surge in exit activity via the public markets is a testament to this transformation, shaping exits in ways that have profound implications for Indian PE-VC strategies.
According to a Bain & Company report, despite the slowdown in dealmaking, 2023 emerged as a marquee year for Indian exits. Exit value soared by 15% to USD 29 billion, accompanied by a rise in exit volume from 210 to 340 exits. Notably, public market sales (primarily block trades) comprised half of exits by value.
Block trades, by definition, are large transactions executed outside the open market, typically between institutional investors. These transactions are increasingly becoming a popular exit mechanism for early-stage investors.
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