Hot stocks, lukewarm VCs: exploring India’s investment paradox

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Hello reader,

In India, two phenomena are on the rise: temperatures and the stock market index. Temperatures in my city, Bengaluru, soared to an unprecedented 40 degrees Celsius. Meanwhile, the stock exchange’s bull run persists. The Sensex, India’s benchmark index, has crossed 75,000 points in a historic feat.

These events harbor surprising elements. Bengaluru, renowned for its pleasant weather nationwide, finds itself in an unusual scenario. Similarly, while a bull run typically signifies increased VC investment, there’s a deviation happening here.

Despite a flourishing market and a robust pipeline of IPOs from companies such as Oyo, Swiggy, Ola, and MobiKwik, VC investments in India declined nearly 63% between 2022 and 2023, according to a Bain & Company report.

In this week’s Big Story, I delve into the reasons behind the disconnect between India’s stock market and its VC ecosystem. Meanwhile, it rained in Bengaluru on May 2, offering respite from the heat.

— Samreen

THE BIG STORY

Image credit: Timmy Loen

India’s companies thrive on public markets, but VCs are holding back
Cautious VCs, vigilant LPs, and concerns of potential down rounds among startups have dampened investor sentiment in India’s flourishing market.

3 Trends to keep an eye on

Hot stocks, earnings reports, restructuring, pressure from activist investors, and more.

Photo credit: Shutterstock

1️⃣ Copyright chaos: Eight US newspapers, including the New York Daily News, Chicago Tribune, and The Denver Post, have filed a lawsuit against OpenAI and Microsoft (MSFT, NYSE), claiming that the tech giants used copyrighted articles to train AI models without obtaining permission or offering compensation for the use of the content.

As the use of AI becomes more prevalent, there could be a parallel surge in copyright infringement cases. Training AI models relies on large datasets from various sources such as websites, books, and articles. The implicated tech companies will need to negotiate licensing agreements to avoid future copyright violations.

2 Eye-popping facts

The one you didn’t see coming