'Resilient Dalal street a boon for private investors'

MUMBAI: India’s capital markets have been resilient, defying global slowdown on the back of robust support from domestic investors, allowing a spate of startups to go public. This has been “the single biggest” positive development for all private market investors, said Shailendra Singh, MD at Peak XV Partners . This is the first time India’s capital markets are strong enough to “decouple” from the US markets and stand on their own, Singh told TOI in an interview.

The blue-chip venture capital firm that split from its Silicon Valley parent Sequoia Capital in 2023 as part of a global restructuring has backed several Indian unicorns , three of which — Pine Labs , Meesho and Groww — are headed for a Dalal Street debut in the current financial year.


“VCs invest for an 8-10 years’ time horizon... if you invest for 8-9 years but there is no liquidity, there’s a big problem (VCs need to deliver returns to limited partners on their investments). India has really stood out in the last 3-4 years because globally, there has been a downturn. IPO activity, even in the US has been completely meagre for three consecutive years. During that time, you had in India thriving capital markets. If high-scale companies with high quality governance are able to go public, have liquidity... this completes the loop for investors (gives them an exit),” Singh said.

“To us, it feels like the capital markets liquidity is an enduring liquidity, not a transient blip because there are enough domestic institutions that are big participants in India’s capital markets. The fact that there is domestic source of strength, not foreign money, makes the market more resilient,” Singh said.

While a resilient capital market would nudge more startups to go public in India, not every company should be public and founders need to be careful, said Singh.

“If a lot of sub-scale companies go public, there could be windows of illiquidity even in public markets subsequently. It’s much worse to be a small public company than a small private company if you are not in a bull cycle,” Singh said. In all, six of Peak XV’s portfolio firms in India have currently filed for IPO and more would be tapping the public markets, Singh said, without sharing details.

For Peak XV Partners, after the split with Sequoia, values driving the company haven’t really changed much although there has been some shift in the investing strategy. The partners want to build Peak XV into a world class global firm anchored in India and APAC.. As it looks to be a global player, the company has set up a team in the US to help Peak expand in the market and scout for opportunities in software and AI, which Singh said is on a “super cycle globally.”

In India, the firm will continue to bet on consumer, fintech, software and AI sectors. Peak XV is not having “FOMO” about quick commerce but sees other promising bets in the consumer space — consumer AI, for instance, could grow as a space in India in the coming years, Singh said.

In India, a lot of startups are coming up in the AI application space and there has been a “big” pick up in seed stage funding in AI firms, he said.