Menlo Park-based VC fund Sequoia Capital announced late Monday that it has raised USD 1.35 billion for the firm’s new venture and growth funds to invest in India and Southeast Asia.
This comes two years after its sixth fund for the regions back in 2018, which had a size of USD 695 million. Sequoia India raised USD 195 million last year to invest in companies looking for seed stage funding, including its accelerator program, Surge.
In a LinkedIn post, Sequoia’s managing director Shailendra Singh said the firm’s limited partners have collectively invested USD 825 million for the growth fund, while a total of USD 525 million was allocated to a separate venture fund. “Sequoia India now operates seed, venture, and growth funds, a structure that allows Sequoia to remain a relevant partner for founders at all stages of their journey,” Singh wrote in the post.
This is the first time Sequoia has split its fund in two parts, with dedicated funds to separately invest in early and growth-stage companies.
The announcement comes at a time when VC and PE investments in India are expected to drop by 60% due to COVID-19. There’s an additional funding crunch in the Indian market due to restrictions put by Indian government on the VC investments coming in from China. Indian tech startups heavily relied on firms such as Tencent, Alibaba, Ant Financial, among others, to accelerate their growth. According to a Venture Intelligence report, funding in the first half of this year nosedived by 31% to 272 transactions, while the total investments fell by 11% to USD 4.1 billion as compared to the same period last year.
“While the pandemic has caused a significant course correction, a new bull cycle for tech startups could soon be on its way,” Singh noted. With a combined GDP that exceeds USD 14 trillion and more than 1.5 billion internet users by 2030, Singh said that the two regions will be a massive digital market in the next decade.
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“We are excited about the depth of opportunities in this region, which is undergoing a massive technology-led transformation,” he said. “The start-up ecosystem in both India and Southeast Asia has come a very long way in the last few years; the market gets deeper and the crop of founders, and their achievements, becomes more impressive each year.”
Sequoia has made quite a few good bets in technology startup giants in these two markets. Its portfolio in India include Byju’s, Oyo, food-delivery platform Zomato, mobility startups Ola and Zoomcar, healthcare startups Practo and 1mg, among others. In Southeast Asia, it has invested in the Indonesian startup giants Gojek, Tokopedia, and Traveloka. It also backed coffee startup Kopi Kenangan, Singapore’s co-living space Hmlet, e-commerce startup Zilingo, and online marketplace Carousell. Sequoia boasts of having a total of 11 unicorn companies in the two regions, to date.
Sequoia also profited when hospitality unicorn Oyo’s founder Ritesh Agarwal bought back the company’s shares from its early investor in November 2019. According to local media reports, Sequoia Capital cashed in around USD 450 million for its 6% stake. In the last financial year ending March 2019, Sequoia made a partial exit from edtech unicorn Byju’s and earned USD 233 million, over 21 times its original investment.