Lightspeed Venture Partners has raised its largest India and Southeast Asia fund to date. The fund is part of the $7 billion that Lightspeed said it had raised to invest in early- and growth-stage startups throughout the world.
Lightspeed Venture Partners has collected $500 million for its largest fund focused to India and Southeast Asia. With the closure, the Silicon Valley-based venture capital company has joined a growing group of technology investors that have collected substantial quantities of dry powder despite a global financing slump.
Lightspeed, which has funded companies such as Oyo,Udaan, Sharechat, and Byju’s, has significantly expanded the size of its fourth India fund from its previous corpus of $275 million, which it accumulated in 2020.
The India fund is part of the $7 billion that Lightspeed announced it had raised to invest in early- and growth-stage firms throughout the world.
Bejul Somaia, a Lightspeed partner who founded the fund’s India franchise in 2007, has been promoted to the fund’s global leadership team and will split his time between the United States, Europe, and India.
In addition to supervising India, Somaia will serve on several investment committees. Lightspeed’s India team now consists of nine partners.
Somaia added, “The opportunity continues to widen in breadth. The quality of founders is improving, technology adoption is growing, and venture-backed firms are going public. All of these changes bolster our belief in the India and Southeast Asia opportunities.”
Over the last year or two, an increasing number of early-stage investors have been putting up significantly larger money as digital firms have benefited greatly from the Covid-19 epidemic.
SequoiaCapital India raised $2.85 billion for its largest India and Southeast Asia fund, Elevation Capital (previously Saif Partners) established a $670 million India fund, and AccelNSE -1.51 percent funded $650 million for India and Southeast Asia.
Smaller organizations, such as Stellaris Venture Capital, have increased and treble their capital to capitalize on the technological boom. The fund will make investments ranging from $500,000 to $15 million, with growth money coming from its worldwide vehicles.
Even as India-focused venture capital companies scoop up bigger sums from limited partners, or fund sponsors, they have broadened the breadth and location of their investments.
Lightspeed’s objective, according to media reports in February, is to focus on growth-stage projects, with a specialized team in place to seek prospects in India.
Growth-stage investments often follow a startup’s initial rounds of fundraising, in which VC funds normally do not participate.
However, in recent years, both internationally and in India, early-stage investors have raised larger funds as well as specialised growth-stage entities to safeguard their stake in hot businesses.
Somaia stated that the VC firm’s focus on growth investment will not alter despite a reduction in late-stage funding.
He explained, “When we commit resources to a market, we do it with a long-term perspective… What is evident is that we care about this region, and it will take time for the growing markets to adjust and establish a new balance. That’s OK; it doesn’t impact our outlook on the market.”
Early-stage finance, on the other hand, has been less affected thus far, as additional funds, like Tiger Global and Alpha Wave Global (previously Falcon Edge), attempt to enter seed and Series A financing.
Somaia explained, “We haven’t seen any big improvements in early-stage valuations yet. We have begun to notice a modest slowing of activity and a flight to quality. That implies that if there’s an early-stage opportunity with a very great team, they’ll probably be able to raise at the same amounts they may have raised six months ago.”
Somaia commented on the fall in technology business valuations in both the public and private markets, saying, “These periods, as terrible as they are, are important. While it is impossible to forecast how long it will persist, we expect it to be longer than prior cycles due to a variety of causes.”
He added, “At the start of the year, we began connecting with founders, sharing what we were observing and pushing them to prepare for what was to come… Companies must reduce burn, make their capital go further, and clearly demonstrate that the underlying economics work.”
After a spate of companies went public last year, new-age digital businesses have pushed back their Initial Public Offering (IPO) dates. Lightspeed has invested approximately $1.5 billion in India since its inception, including returns from firms such as IEX (IPO), Oyo, and Tutorvista, among others.