IIT Madras’ 7th Annual India Venture Capital and Private Equity Report 2015 is a compilation of comprehensive data metrics related to India’s funding and Private equity scene. While we released a previous article on how Health-tech startups raised maximum average early-stage funding, lets take a look at growth and late stage funding metrics.
As per the report, the average value of investment in growth and late stage funding has been around ₹87 crores, which is more than six times the average investment in early stage funding.
In this stage, the average investment amount varies considerably between sectors. BFSI has the highest average investment amount (Rs. 139.23 crore) followed by IM&E (Rs. 122.92 crore) and M&E (Rs. 120.56 crore). The lowest average investment amount is for IT&ITES sector (Rs. 43.19 crore). The following table shows average investment in different sectors.
The report claims that average stake acquired in the growth and late stages is about 17 percent. The lowest stake acquired is 14.04 percent for the IT&ITES sector, and the highest stake acquired is 21.99 percent for the agriculture sector.
There is also considerable variation in the investment structure between different industries. While the BFSI sector has the highest proportion investment as straight equity (72.27 percent), the IM&E sector has the lowest proportion (26.65 percent).
It is influenced by the perceived inherent risk of different sectors, the nature of assets created, as well as the type of investor. The proportion of investment in straight equity is higher in the growth and late stages as compared to that of early stage funding.
The percentage of investment in straight equity has gradually decreased with time, which indicates that more investments in recent years has been in structured equity.
Overall, domestic investors have a higher proportion of investment in straight equity compared to that of foreign investors. However, in the report, no consistent trend is seen across industries. It suggests that the PE investors have a higher proportion of their investment as straight equity (62.1%) as compared to that of VC investors (46.78%).
After the period of 2001-2003, the investors have been increasing their stake in the company they have invested to have influence in the company. However, as the age of the company increases, the percentage of shareholding acquired reduces gradually.
Also, the report reveals that the stake acquired by domestic investors is marginally higher than that of the foreign investors at the overall level. However, foreign investors have a higher shareholding.