Opportunities in the Indian Market

Regulatory changes have long been a catalyst for financial innovation in India, big exhibits being UPI for payments, ONDC for commerce, AIFs for the PE/VC sector. Now, SEBI’s proposal for 𝐒𝐩𝐞𝐜𝐢𝐚𝐥𝐢𝐳𝐞𝐝 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐅𝐮𝐧𝐝𝐬 (𝐒𝐈𝐅𝐬) is set to unlock new opportunities for both investors and investment managers. SIFs are a new category of investment products introduced by SEBI, offering Indian investors access to sophisticated investment strategies that were previously unavailable, including: ✔️ Long-short equity strategies ✔️ Inverse ETFs ✔️ Alternative fixed-income products 𝐓𝐚𝐫𝐠𝐞𝐭 𝐔𝐬𝐞𝐫 𝐒𝐞𝐠𝐦𝐞𝐧𝐭: SIFs, with a minimum investment of ₹10 Lacs, are designed for HNIs and investors seeking advanced strategies and higher returns. They offer exposure to complex assets like InvITs, real estate, and structured debt, making them ideal for diversifying and optimizing portfolios. 𝐎𝐩𝐩𝐨𝐫𝐭𝐮𝐧𝐢𝐭𝐲:  With a growing base of HNIs and affluent customers in India, SIFs can help open up deeper revenue pools for fintechs, wealth managers, and AMCs in: ✔️ 𝐆𝐫𝐨𝐰𝐢𝐧𝐠 𝐭𝐡𝐞 𝐏𝐢𝐞: Can unlock a new segment of investors—those who might not traditionally opt for ETFs but also find Portfolio Management Services too complex or costly- broadening the overall participation in India’s capital markets ✔️ 𝐏𝐫𝐨𝐝𝐮𝐜𝐭𝐢𝐳𝐢𝐧𝐠 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭𝐬: Enable the creation of scalable, strategy-driven investment products, allowing fintechs to offer sophisticated portfolios tailored to high-net-worth clients. ✔️ 𝐄𝐧𝐡𝐚𝐧𝐜𝐞𝐝 𝐬𝐞𝐫𝐯𝐢𝐜𝐞 𝐭𝐨 𝐜𝐥𝐢𝐞𝐧𝐭𝐬: Better personalized portfolios for current investors with access to complex assets, offering higher returns and tailored solutions for sophisticated investors. Curious to see how private advisory and fintechs in India will collaborate to serve the growing base of HNI and affluent investors in the future.

🔻 It's no secret that venture funds have been deeply impacted by the lack of liquidity in IPO and M&A markets over the past couple of years. 💰 Distributions from VC funds to LPs dropped 84% from 2021 to 2023 per Wellington Management, resulting in a 14-year low in overall distributions. 🇮🇳 Despite the anemic deal activity in the US markets, one market has far surpassed all others and continues to buck the liquidity trend: India. 🤑 Per Axios, India saw private capital-backed exits reach $25B in 2023 and has already surpassed $11.5B in the first half of 2024. Over these past 18 months, India has accounted for the highest share (37%) of overall exit value outside of North America and Europe...even surpassing China. 🏅 Not only has the country seen outsized deal and exit activity, but it has also experienced rapid growth specifically within sports and gaming. 🏏 Of the country's 1.4B people, an estimated 678M (47%) are now considered sports fans per Ormax Sports, roughly double the entire US population, with sports-related Google searches up 50% in the country this year. The Indian sports pandemonium hasn't been limited to just the country's borders. Just a couple of weeks ago, the US hosted the ICC Men's T20 Cricket World Cup, with jaw-dropping attendance numbers of 165k fans across the tournament as India's sports culture is successfully making its way into the US and abroad. 🎮 The Indian gaming ecosystem is also experiencing rampant growth. The country is now the fastest-growing mobile gaming market in the world per Interactive Entertainment, expecting to double in value from $3.1B in 2023 to over $6B by 2028. With over 568 million gamers and (even more noteworthy) 240 million paid gamers, the country is seeing unrivaled demand in various sectors of the gaming landscape. Courtside has long seen India as a market ripe for venture investment, having made 6 investments in the country within the past 4 years. With a rapidly growing population of sports / media / gaming fans, increasing venture deal volume, and an attractive exit market, we couldn't be more bullish on the future of venture in India. Check out the link below to see the full Axios article as well as Courtside's former blog post on India. https://lnkd.in/gKRJ59v4 https://lnkd.in/gWJE5zqK #VC #India #sports #gaming

Venture funding hit a major low in India in 2023. For the first half, local startups raised a total of $5.5 billion, down 72% over last year. COVID era cheap money has vaporized, and investor focus has shifted towards profitability. But the capital drought may frankly be much shorter than expected. There’s multiple signs of recovery on the horizon, and high quality teams and businesses could actually come out of this winning. Most notably: 1) AI presents an emerging and promising frontier that can foster new innovation. There’s multiple new technologies and business models possible today that virtually didn’t exist 12 months ago. 2) The public market winter seems to be over – the Nasdaq is up 43% so far this year and Big Tech giants are absolutely killing it! 3) Economic conditions are better than imagined, both in the US and India. Inflation is under control and the Indian consumer particularly appears strong, spending lavishly on restaurants, travel, and weddings. Regardless, it is going to be an uphill climb. There's plenty of overhang from lax financial practices, inflated valuations, delayed IPOs, mishandled layoffs etc. But areas like enterprise tech, hardware, deep tech may be looked at more favorably, than anything and everything with tech slapped into it. #startups #india