Sequoia Capital India on Monday announced it has secured $1.35 billion from LPs for two new funds in the country as the storied venture firm looks to ramp up its investments in the world’s second largest internet market and Southeast Asia.
The two new funds — a $525M venture fund and a $825M growth fund — will help the venture firm, which operates in India and Southeast Asia through one arm, more comprehensively serve the startup ecosystem in the region, said Shailendra Singh, a managing director at Sequoia Capital India.
“A fundraise represents a massive responsibility to deliver attractive returns to Sequoia’s Limited Partners, the majority of which are non-profits, foundations and charities. We do this by partnering with outstanding founders who are building category defining companies,” he said.
Sequoia Capital India, which roped in former Google India head Rajan Anandan last year, made more than 50 investments last year, more than any firm in the country.
The firm, which began investing in India 14 years ago, closed its last fund, of $695 million, for India and Southeast Asia in 2018. That was its sixth fund for the region.
The VC firm has made several high-profile investments over the years, including in edtech giant Byju’s, which is now valued at $10.5 billion, Singapore e-commerce startup Zilingo, and fintech startup PineLabs, online learning startup Unacademy, fintech firm RazorPay, and Khatabook, which offers bookkeeping services to merchants. Last year, Sequoia Capital India sold most of its stake in budget hotel startup Oyo.
The new funds from Sequoia comes as a time when several investors have lost appetite as the coronavirus pandemic disrupts businesses. The per capita income of Indians, which remains some of the lowest across the globe, has also not improved over the years.
“Due to frequent cycles of intense competition, startups in our region have struggled to grow rapidly with good unit economics, often posting very high losses for the scale of business. This has prevented very large profitable technology businesses in our region from emerging. To add to these challenges, startups in India do not have the benefit of a regulatory framework that allows listing on foreign exchanges like Nasdaq. In this market context, most start-ups have chosen to remain private, and raising capital has become a proxy for success,” said Sequoia’s Singh.
“We believe there is an opportunity to choose a different path. Our ecosystem has arrived at a fork in the road.”
Last year Sequoia Capital India launched an accelerator program, called Surge, for early-stage startups. Since then about 50 startups have participated in Surge, which some analysts told TechCrunch has reduced Y Combinator’s appeal in India.
More to follow…