Venture

Examining The Makeup Of India-Focused Funds 

With India’s rapid adoption of digital products and the growth of startup hubs like Bengaluru, it seems like investors around the world are taking notice. The stories of successful companies like Oyo and Swiggy are certainly playing a role in grabbing the international attention of investors, but if we look at the biggest investors in India (and we did) — they have been there for a while.

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So in reality, investor interest in India is not a recent phenomenon. Data from Crunchbase shows that there’s still a continuing clip of India-focused private investment funds being established, both by new contenders or decades old firms.

In 2018, there were 85 funds that focused on India (this includes both funds raised by firms headquartered in India, as well as funds raised by firms outside of India, but that have a focus within the region). This year, up to early December, there are 63 new funds.

That’s a large uptick from a decade ago: in 2009, there were only two new India-focused private investment funds announced, according to Crunchbase data.

Now that we have the numbers, let’s get context.

The Firms

Earlier this month, Accel announced a $550 million India-focused fund, its sixth in the region, to invest in more early stage upstarts in the country. With the new money, Accel has about $1.6 billion assets under management in India.

It’s also worth noting that Silicon Valley’s Accel has been operating in India for 15 years. An early bet that proved lucrative with investments like Swiggy and Flipkart (which was acquired by Walmart). Pivoting to Sequoia, another high profile investment firm based in Menlo Park, we can see that it has over $4.5 billion in assets in India. It is currently raising money for a seed fund just for India startups. Forbes India claims Sequoia is India’s largest venture capital firm.

In a blog post, Accel said when it started in India, “just 1 in 50 Indians had access to the internet and mobile phone ownership was nascent. Yet we firmly believed that India was on the cusp of a big change.” Fast forward, India has 600 million users on the internet. The Accel team claims its India investments have created around $100 billion of enterprise value in the past decade.

While U.S.-based firms have a large presence in terms of cash, within India, there are some large contenders as well. Helion Venture Partners, a firm founded in 2006, was one of the biggest domestic venture capital firms in the country. It has over $605 million in assets, and has invested in over 134 companies. However, according to some reports, the firm has since slowed down its investment pace due to internal tensions and departures of key founding partners.

There’s another homegrown firm, Nexus Venture Partners, which manages $1.5 billion across its United States and India funds. Most recently, it closed its fifth fund at $353 million.

Bottom line: all this activity tells us that gigantic firms like Accel and Sequoia aren’t only interested in one-offs. Rather, they’re doubling, or better, quadrupling down on India after years in the region. And newer firms are following: Fireside Ventures launched a second fund, India Quotient announced a third investment vehicle, and Aavishkaar Venture Capital closed its fourth fund.

It shows that despite a flurry of coverage of India’s startup scene, there’s been good news for older and newer players alike.

Illustration: Li-Anne Dias

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