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In the bustling metropolis of New Delhi, India upheld its stature as the second-largest hub for venture capital and growth financing across the expansive Asia-Pacific region during the preceding year, as unveiled by a recent report on Thursday.

Despite grappling with formidable challenges, India’s venture capital landscape showcased remarkable fortitude throughout the duration of 2023, marking a period characterized by sustained moderation, as per the findings presented in the report jointly compiled by Bain & Company in partnership with the Indian Venture and Alternate Capital Association (IVCA).

“In a year seemingly fraught with obstacles, investors exhibited remarkable resilience by adapting to the shifting terrain. Notably, there was a discernible pivot in investment strategies from technology-centric ventures to more conventional sectors anchored by robust fundamentals – encompassing realms such as healthcare, retail, and financial services,” remarked Sai Deo, a Partner at Bain & Company.

The realm of investment bore witness to a subdued sentiment on a global scale, with investments plummeting by a substantial 65 percent in comparison to the preceding year of 2022, culminating in a total of $9.6 billion invested in 2023 as opposed to the $25.7 billion recorded previously.

The realm of Generative AI experienced a significant upsurge in momentum, with funding escalating from $15 million to a staggering $250 million over the course of 2022-23 on a global scale. Evidently, sectors revolving around technological innovations (ranging from consumer technology, financial technology, to software/SaaS) retained their hegemony throughout 2023, securing nearly 60 percent of the total funding.

Investor attention gradually shifted towards conventional sectors exhibiting robust underlying dynamics (including banking, financial services, insurance, and healthcare), in addition to emergent themes such as electric mobility and generative artificial intelligence, as underscored within the report.

The domain of electric mobility emerged as another burgeoning sector, witnessing a notable uptick in prominence (from 3 percent to 7 percent of the total funding), propelled by the burgeoning maturity of the ecosystem which subsequently kindled heightened investor interest, as corroborated by the findings presented.

“Looking ahead to the foreseeable future, global investors are poised to maintain an optimistic outlook towards India as a favorable investment destination, characterized by a myriad of promising sectors and themes primed to captivate investor attention,” affirmed Sriwatsan Krishnan, a Partner at Bain & Company.