American venture capital firm Sequoia is about to make big bets on India’s burgeoning startup ecosystem, the third-largest in the world.
The Silicon Valley-based investor is raising USD 1.25 billion for its seventh India fund, local media Economic Times reported, citing sources. This would be the largest Sequoia fund for the country to date. It raised USD 920 million in early 2016, and USD 695 million for its sixth fund in 2018.
Given the rapid pace at which the Indian startup ecosystem is maturing, Sequoia’s confidence in the country seems to have grown despite the economic slowdown and WeWork fiasco that saw the SoftBank-backed startup’s valuation fall like a ton of bricks.
Sequoia executives raked in good money 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 made around USD 450 million for a 6% stake sale. In the last financial year ended March 2019, Sequoia executed a partial exit from edtech unicorn Byju’s and made USD 233 million, over 21 times its original investment.
According to the report, Sequoia is likely to split the new corpus into two vehicles—one for early-stage bets, and other for growth-stage investments. The arrangement signals the American firm’s growing appetite for startups operating in their initial stages. Early last year, it launched an accelerator program, Surge, for early-stage startups in India and Southeast Asia.
Of the total corpus, USD 750–800 million is expected to be dedicated to the growth fund, while the rest will be raised for early-stage businesses. Some investments may head into Southeast Asia as well.
To highlight the importance of India in its global strategy, Sequoia will hold its annual global meeting of limited partners (LPs) in India at the end of March, forgoing the usual destinations in the United States and China.
“The roadshows will happen after the global LPs meet and the fund will most likely be closed during the second half of the year,” one of the sources told Economic Times.
Last year, Sequoia strengthened its top team in the country when it brought on board Google’s former head in India and Southeast Asia, Rajan Anandan, and then Uber’s Asia head Amit Jain.
Apart from Oyo and Byju’s, some of the other major investments by Sequoia in India include food-delivery platform Zomato, mobility startups Ola and Zoomcar, and healthcare startups Practo and 1mg.