Decoding VC exit returns: the Indian experience

What is it about?

This paper models the relationship between the exit return realized by VC firms and the investment duration, the overall market condition and the industry to which the investee firm belongs. In this study 210 exit transactions in India, which occurred during the time period of 2004-2017 are examined. Exit return has an approximate U-shaped relationship with investment duration and the turning point in the convex relationship happens around 7 to 8 years after investment. Returns are weakly related to the market condition, discarding the market timing hypothesis. Relationship patterns are found to be generally unvarying during the time period under study.

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