Third Time’s the Charm: Why Long-Term Vision Wins in Governance and Private Markets

This sentiment resonates deeply within India’s private market as well, particularly in the private equity and venture capital (PE-VC) space.

When India’s first Prime Minister Jawaharlal Nehru secured a third term amidst our nation’s newfound democratic status in 1962, India was a young country. Having just tasted independence 15 years ago, India was still at a foundational stage, finding its footing across numerous socio-economic and cultural frontiers. 62 years later, as Prime Minister Narendra Modi repeated Nehru’s historic win, India has grown from a young sapling to become the fifth-largest economy in the world — our eyes set on becoming the third-largest economy globally. This exponential growth echoes the importance of long-term vision and an unwavering commitment to enacting meaningful change.

This sentiment resonates deeply within India’s private market as well, particularly in the private equity and venture capital (PE-VC) space. Here, too, long-term thinking reigns supreme. As per Oister-CRISIL’s ‘No Ifs About AIFs’ 2023 report, the industry boasts over 40+ seasoned fund managers with a track record of managing three or more funds. These experienced players embody the power of accumulated wisdom and unwavering dedication.

There’s a fundamental truth at play: building a successful portfolio, much like governing a nation, requires a marathon runner’s mindset. Both endeavors demand time, strategic planning, and unwavering dedication. Just as governing a nation necessitates navigating complex challenges with a long-term perspective to foster sustainable growth, nurturing a thriving PE-VC ecosystem hinges on the same principle.

India’s economic transformation is being driven by a multi-pronged approach. Government initiatives like “Make in India,” launched in 2014, have spurred domestic manufacturing, attracting significant investments and creating jobs. While still evolving, the program’s long-term potential remains promising. The Aatmanirbhar Bharat package, valued at Rs 20 lakh crore, focuses on strengthening the fundamentals: land, labour, liquidity, and laws. This comprehensive approach aims to empower domestic industries and reduce dependence on imports. The National Infrastructure Pipeline (NIP) proposes an investment of US$ 1.4 trillion for critical infrastructure projects in sectors like roads, railways, and power. This ambitious plan aims to modernize the nation’s infrastructure and propel it towards a service-driven economy.

Further bolstering this growth is a thriving PE-VC ecosystem. Government initiatives have eased regulations and attracted foreign investment, fostering an environment for venture capital and private equity firms to flourish. Additionally, the investor-friendly FDI policy allows for greater foreign participation across various sectors. Startup India, another government flagship program, has been instrumental in nurturing innovation and entrepreneurship. With over 1 lakh recognized startups, 12.42 lakh employment generated, and a 128% compounded annual growth rate of recognised startups (between 2016-23), the program has been a resounding success. The PE/VC sector is expected to mirror this growth, surging to USD 600 billion and contributing over 10% to India’s ambitious $5 trillion GDP target by 2027.

This emphasis on long-term vision isn’t a luxury; it’s a necessity. Complex challenges require sustained attention and a commitment to solutions that unfold over years rather than months. Similarly, the PE-VC ecosystem also thrives on a long-term perspective. Identifying promising startups, providing strategic guidance, and nurturing them through growth phases takes time and a deep understanding of the market dynamics.

The presence of experienced fund managers managing multiple funds further underscores the crucial role of long-term vision in the PE-VC world. Their accumulated knowledge and established networks play a vital role in identifying promising ventures, providing effective guidance, and ultimately, driving economic progress through job creation and innovation.

A stable and predictable policy environment fosters investor confidence, while a vibrant PE-VC ecosystem acts as a catalyst for innovation and job creation. This convergence creates a powerful engine for economic advancement. The “Digital India” initiative aimed at transforming India into a digitally empowered society serves as a fine example. Thanks to the initiative, the Indian Technology Industry surpassed USD 250 billion mark and is expected to touch the USD 300 – USD 350 billion revenue mark over the next 5 years. A strong government focus on empowering sunrise sectors such as deep-tech through the National Deep Tech Startup Policy (NDTSP) paves the way for path-breaking scientific and technological breakthroughs as well as robust market growth.

There’s no denying that challenges lie ahead, both for the government and the PE-VC sector. However, the growing presence of experienced players in the PE-VC landscape paints a picture of continued commitment and long-term vision. With a well-defined vision, unwavering commitment, and a unified approach, India is well-positioned to not only overcome these challenges but also emerge as a global leader in the years to come. This journey towards leadership is intrinsically linked to the ever-growing opportunity for diversification through experienced PE-VC players. Their expertise will be crucial in fueling this growth and solidifying India’s position on the global stage.