Silicon Valley-based venture capital (VC) firm Accel Partners Monday said it has raised its sixth India fund worth USD 550 million to boost its early-stage investments in the country.
The new capital will be “primarily invested in seed and early-stage startups across what we believe to be one of the most vibrant entrepreneurial ecosystems in the world: India,” the company said in a recent blog post.
The 35-year old American VC set up its first fund in India in 2005. Over the last 15 years, Accel Partners has scaled its team to over 50 people in India, where it now manages USD 1.6 billion in assets.
“The world was a very different place (in 2005),” it said in its blog. “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.”
“Today, the opportunity ahead is significantly bigger than when we started in 2005,” the VC firm said. “India can now digitally identify 1.3 billion people, has 600 million internet users and 150 million online transacting customers with a national payments platform that processes USD 20 billion a month.”
Some of its most notable portfolio companies include Swiggy, Freshworks, Cure.fit, BlackBuck, BookMyShow, and Bounce. Accel Partners was also an investor in Flipkart, which earned it USD 1 billion when the homegrown e-tailer got acquired by American retail giant Walmart for USD 16 billion in 2018.
So far, Accel Partners has invested in 100-plus early-stage startups in India, in line with its global strategy of investing in seed-stage companies. In fact, Accel Partners said it was the first institutional investor in about 85% of startups in its portfolio.
For instance, it started with a USD 800,000 investment in Flipkart and continued backing the company until it got acquired in 2018. Its first USD 1 million cheque to Freshworks in 2011 was when the SaaS company had just six employees. Similarly, the firm made USD 1 million seed investment in Swiggy when the food delivery company was making around 100 deliveries a day in Bengaluru. Today, both Freshworks and Swiggy have become a unicorn company with a valuation of USD 3.5 billion and USD 3.4 billion, respectively.
In the past decade, Accel Partners has primarily invested in five categories—consumer internet, software, business-to-business, healthcare, and financial technology, Anand Daniel, a partner with Accel Partners (India) told local media Mint, adding that “it will continue to invest in these spaces and more.”
“If you look at the numbers of transacting users, it shows that the consumer market is huge and a large part of it is under served. The business models to serve the market aren’t obvious but we’re coming across many entrepreneurs who are striving to find the right models,” he said. “And we’re seeing that the newer generation of firms are scaling much faster compared with the firms that came before. So, the consumer market is still at a very early stage.”
According to Accel Partners, the digital adoption will accelerate in India going forward, given that the country has a robust digital infrastructure that is expanding rapidly. The VC firm said it is already seeing this trend playing out in categories like food delivery, digital payments, e-commerce, agritech, education, insurance, logistics, healthcare, real estate, and manufacturing.