Venture Capital Exits in India: Mechanisms, Trends, and Determinants of Liquidity in an Emerging Start-up Ecosystem

Komala G

doi:10.36948/ijfmr.2026.v08i04.83215

Venture Capital Exits in India: Mechanisms, Trends, and Determinants of Liquidity in an Emerging Start-up Ecosystem

Author(s)	Dr. Komala G
Country	India
Abstract	Abstract Exit realization is the mechanism through which venture capital (VC) investment generates distributable returns to limited partners and, in turn, sustains the fundraising cycle that underpins entrepreneurial finance. This study examines the evolution, scale, and composition of VC exits in India between 2021 and 2025, drawing on data published by Bain & Company, the Indian Venture and Alternate Capital Association (IVCA), Equirus Capital, Inc42, and the Silicon Valley Bank State of the Markets report. The analysis finds that aggregate private equity VC exit value in India peaked during the 2021 listing boom, softened through 2022–2023 as the global IPO window narrowed, rebounded to approximately US$ 20–27 billion in 2024 on the strength of a sevenfold surge in initial public offering (IPO) led liquidity, and then contracted sharply in 2025 to an estimated US$ 7–11 billion a four-year low even as primary investment inflows reached a three-year high of approximately US$26 billion. In this analysis, the seemingly contradictory situation of substantial capital investment occurring alongside limited liquidity realization is explored. This is done by examining valuation adjustments, the dominance of IPO-driven returns concentrated in a few large-cap listings such as Groww, Lenskart, Urban Company, Pine Labs, and Dr Agarwal's Health Care, and the increasing trend of discounted secondary sales for firms without a clear path to profitability. The study also delves into the regulatory and market structure factors influencing the availability of exit channels, including the Securities and Exchange Board of India (SEBI) listing regulations, the rise of GP-led continuation vehicles, and the growing frequency of mergers and acquisitions (M&A) driven by acquihires. The findings suggest that although India's exit ecosystem is more developed than it was ten years ago, it remains limited and prone to concentration, affecting fund-level returns, the confidence of limited partners, and the speed of future capital formation.
Keywords	Keywords: venture capital exits; India; initial public offering; secondary sale; mergers and acquisitions; liquidity; SEBI; private equity; emerging markets
Field	Business Administration
Published In	Volume 8, Issue 4, July-August 2026
Published On	2026-07-17
DOI	https://doi.org/10.36948/ijfmr.2026.v08i04.83215

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Venture Capital Exits in India: Mechanisms, Trends, and Determinants of Liquidity in an Emerging Start-up Ecosystem

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