Venture capital (VC) activity in 2024 paints a tale of two markets: India’s burgeoning growth and China’s slowdown. India witnessed a significant 14.1% rise in VC investments, reaching USD 16.77 billion across 888 deals by November. The technology sector spearheaded this growth, with emerging industries like electric mobility and green hydrogen gaining momentum. Meanwhile, China faced a 23.1% decline in deal volume and a 22.5% drop in funding value, driven by regulatory challenges and macroeconomic uncertainties. Despite the downturn, China remains a global VC leader. Here’s a closer look at the dynamics shaping these markets.

India’s VC Boom in 2024

Record Growth in Investments:
From January to November 2024, VC investments in India surged to USD 16.77 billion, marking a 14.1% increase in value and a 21.8% rise in deal volume compared to the same period in 2023.

Sector-Wise Performance:

Technology: USD 6.50 billion, a 52.5% year-over-year growth, leading the charge.
Consumer Discretionary: USD 2.30 billion, up 32.2%.
Financial Sector: USD 2.20 billion, showing a slight decline.
Major Deals:

KiranaKart Technologies (Zepto): USD 1.3 billion.
Poolside AI SAS: USD 500 million.

Drivers of Growth in India

Optimism for 2025:
Industry leaders predict sustained growth in late-stage funding rounds and IPOs in 2025 as funds deploy capital more aggressively. Bhaskar Majumdar and Sajith Pai foresee a positive transformation in India’s startup ecosystem.

Emerging Opportunities:

Electric Mobility and Green Hydrogen: New growth frontiers gaining traction.
Deep Tech Ventures: Robotics, drones, and semiconductor technologies are attracting intellectual property (IP)-driven investments.
Traditional Sectors: Fintech and e-commerce continue to dominate investor interest.
Challenges:
India’s economic reliance on its "India1" segment—30 million households contributing disproportionately to GDP—poses risks. However, robust savings and capital inflows bolster investor confidence.

China’s Venture Capital Slowdown

Decline in Investments:
China recorded USD 32.3 billion in VC funding across 2,313 deals from January to November 2024, a steep drop compared to 2023’s USD 41.7 billion and 3,006 deals.

Factors Influencing the Slowdown:

Regulatory crackdowns dampening investor sentiment.
Macroeconomic challenges creating uncertainty.
Subdued market conditions limiting deal activity.
Key Deals:
Despite the slowdown, significant transactions include:

Changxin Technology: USD 1.5 billion.
AVATR: USD 1.4 billion.
IM Motors: USD 1.1 billion.
Moonshot AI: USD 1 billion.

China’s Position in the Global VC Landscape

Global Rankings:
China remains the second-largest VC market globally, accounting for:

15.2% of global deal volume.
13.6% of global funding value.
Market Resilience:
Despite challenges, China continues to attract significant investments in key sectors, underscoring its ongoing relevance in the global VC ecosystem.

Expert Insights:
Aurojyoti Bose, Lead Analyst at GlobalData, noted:
"VC funding activity in China has remained subdued due to crackdowns and macroeconomic uncertainties. However, substantial deals indicate its continued importance in the global VC market."

Comparative Outlook: India vs. China

India’s Growth Momentum:
India’s diverse sectoral growth and optimism for 2025 place it on a strong trajectory to become a global leader in venture capital.

China’s Resilience Amid Challenges:
While facing regulatory and economic headwinds, China’s significant deals and global market share highlight its resilience and strategic importance.

Bottomline

India’s venture capital market thrives on innovation, diverse opportunities, and strong investor confidence, marking 2024 as a year of robust growth. In contrast, China grapples with economic challenges but maintains its global relevance through substantial deals. As the global VC landscape evolves, both markets offer unique opportunities for investors, shaped by distinct dynamics and growth trajectories.