Rise of Secondary Exits in Indian Investment Landscape
A survey revealed that 92% of investors perceive an increase in liquidity, with secondary share transactions playing a crucial role in this trend. This shift has prompted venture capital firms to launch secondary-focused funds, enhancing liquidity and offering structured exit options, with 92% of investors perceiving increased liquidity. The rise in preference for these deals suggests an evolving investor mindset.
The investment landscape in India is witnessing a significant shift, with 41% of investors now favoring secondary deals, according to a survey by Inc42 for the third quarter of 2025. This marks a notable change as initial public offerings (IPOs), buyouts, and acquisitions become less popular exit strategies.
Preference for Secondary Deals
Secondary exits are becoming a prominent feature of the maturing Indian market. The rise in preference for these deals suggests an evolving investor mindset. Venture capital firms are responding by launching funds specifically focused on secondary transactions, providing new avenues for early investors to exit their positions.
Investors are increasingly inquiring about liquidity timelines, highlighting a growing demand for flexible exit options. A survey revealed that 92% of investors perceive an increase in liquidity, with secondary share transactions playing a crucial role in this trend.
Impact on Liquidity and Market Dynamics
The increasing popularity of secondary funds in India is contributing to a more organized market. These funds offer structured channels for investors to realize returns, enhancing market efficiency. With significant liquidity expected in the 2025 IPO cycle, secondary exits provide a timely solution for stakeholders looking to manage their investments.
Recent corporate acquisitions underscore this trend. For instance, Clensta was acquired by Florida Beauty Labs, while Reliance made an offer to acquire Dunzo. These transactions illustrate the dynamic nature of the current investment environment.
Startup Success and Market Maturity
In 2025, 18 startups raised a total of INR 41,000 crore through IPOs, while six startups achieved Unicorn status. These milestones reflect the growing success and maturity of the Indian startup ecosystem, where a successful exit is often seen as an IPO or acquisition.
However, the emergence of phantom exits, where founders are hired and intellectual property is licensed, introduces a new dimension. Driven by Big Tech's race for AI talent, these exits concentrate talent and intellectual property within large corporations, potentially bypassing traditional liquidity events.
Challenges and Opportunities
The advent of phantom exits presents challenges, particularly for venture capital firms, which traditionally rely on a power-law distribution of returns. Such exits can erode the confidence of limited partners due to a perceived lack of accountability and reduced ecosystem diversity.
Despite these challenges, the Indian investment landscape is poised for continued growth and transformation. The rise of secondary exits offers both opportunities and complexities, signaling a maturing market that is adapting to the changing needs and preferences of investors.