Bengaluru/ Mumbai: Sequoia Capital has raised $2.85 billion to deploy across startups in India and Southeast Asia, the largest dedicated corpus for the region by a risk investor. It will utilise $2 billion across its India venture and growth investments, while the remaining will go to the Southeast Asia companies.
This is the first time that Sequoia has demarcated allocations separately for India and Southeast Asia (SEA), a geography where it has been active over the past five-six years with bets like GoTo (the combined entity of GoJek and Tokopedia), One Championship and Zilingo.
Sources in the know said the fund will plough $300 million from its India venture and SEA vehicles for seed-stage investments under Surge.
Sequoia has so far deployed $6 billion in India and SEA across more than 400 firms since launching its India franchise back in 2006.
The Silicon Valley headquartered blue-chip venture capital firm has backed Indian startups such as food delivery app , Software as a Service firm Freshworks, social commerce company Meesho, and edtech unicorn Byju’s. Globally, the VC firm is well known for being an early backer of tech giants including Google, Apple and WhatsApp.
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This is its largest India-focussed fund, exceeding those raised by other private equity and VC firms such as Alternative Asset Advisors ($1.3 billion), Brookfield Asset Management ($1.04 billion), ChrysCapital ($950 million) and Kedaara Capital ($750 million), as per data from Venture Intelligence.
The development comes after it recently told its Limited Partners (LPs), or sponsors in the fund, that it had decided to postpone the close of its latest amid an investigation at one of its portfolio firms, ET reported on May 18.
“This fundraise, which comes at a time when the markets are starting to cool after a very long bull run, signals our deep commitment to the region and the faith our Limited Partners have in the long-term growth story of India and Southeast Asia,” Sequoia India said in a blog post.
The new funds will bolster its mission to help “daring founders” build legendary companies from idea to IPO and beyond, it added.
“…we intend to double down on our efforts to help founders build healthy companies that will endure … There’s a strong sense in the emerging economies and fast-changing societies across India and Southeast Asia that ‘now is our time’. Many large companies with regional or global footprints will emerge from this region in the decade to come,” it said.
Last year was a record-setting one for Indian startups, which cumulatively raised $36 billion, according to data from UK-based investment data platform Preqin. Companies such as Zomato,
, PolicyBazaar and went public last year.
However, 2022 started off with a bunch of Sequoia portfolio entities like fintech firm BharatPe, social commerce venture Trell and Singapore-based wholesale e-commerce platform Zilingo courting controversies for alleged lapses in corporate governance, leading to the ouster of BharatPe founder Ashneer Grover and Zilingo cofounder and CEO Ankiti Bose. Sequoia has also terminated its ties with Algo Legal, a legal entity that has been working with the VC fund, post probe findings, ET reported on June 3.
The Sequoia fund also comes amid signs of global macroeconomic headwinds which continue to affect fundraising opportunities for startups. Last month, the VC firm sent a 51-page presentation to its portfolio founders globally, warning them of the economic downturn, and to not expect a quick recovery from the current market conditions.
It also advised founders to cut expenses and said that the “era of being rewarded for hyper-growth at any costs is coming to an end”.
“Sequoia India’s approach, where it plays across the investing spectrum, gives it access to a high-quality pipeline of companies… the growth-stage opportunities can help it massively double down on its successful bets and even the misses. In this environment, to have this quantity of dry powder is a huge advantage,” said Karan Sharma, executive director and co-head, digital and technology at Avendus Capital, a Mumbai-based financial services firm.
In March last year, Sequoia closed its second seed fund at $195 million, as it looked to back early-stage startups across India and Southeast Asia under its Surge accelerator programme.
In 2020, the VC firm said it had received commitments totalling $1.35 billion from LPs for two new India- and Southeast Asia (SEA)-focussed funds — a $525-million venture fund, and a $825-million growth fund.
Last year, it also launched Sequoia Spark, a fellowship for female founders, and Sequoia Build, a programme focussing on growth stage startups looking to scale sustainably.
Several venture capital firms including
, Elevation Capital, Athera Venture Partners (formerly Inventus Capital), have all closed their latest funds and increased their corpus size on the back of a record-breaking funding year for Indian startups.
ET reported previously that the flood of venture capital directed at Indian startups in recent years was drying up, as investors take a cautionary approach. Between April 1 and May 16, there were only nine funding rounds of more than $100 million, cumulatively amounting to a little over $2 billion, compared to 27 such deals in the January-March period this year, according to data sourced from New York-based analytics platform CB Insights.
Unicorn rounds – which catapulted 42 companies to the once-elusive club in 2021 – have also come to a halt. Till date, only 17 startups valued at over $1 billion have been birthed this year, with April and May seeing only five such deals.