VC firm Sequoia looks to back world-beating startups in India, SEA; launches $1.35 billion mega fund

Sequoia has been investing across all stages of a startup cycle – seed, mid, and growth.

One of India’s most prolific venture capital fund Sequoia India has secured a commitment of $1.35 billion for two new India and Southeast Asia focused funds. The two funds — $525 million venture fund and $825 million growth fund will invest in startups across the region, Sequoia Capital’s managing director Shailendra J Singh announced in a LinkedIn post. “The combined GDP of India and SEA is expected to cross $14 trillion and the number of mobile internet users will likely cross 1.5 billion by 2030. This region will become home to a number of massive technology companies during the next decade,” Singh said.

Sequoia has made 376 investments in India with the most recent one in contract manufacturing startup Zetwerk, as per deals tracker Crunchbase. The fund boasts of backing India’s top technology companies including Byju’s, JustDial, Ola, OYO, Zomato, Druva, Pine Labs etc. The firm has made 35 exits so far even as it has raised 5 funds since 2005. It had last raised Principals Seed Fund I in December 2019, as per Crunchbase. Sequoia has been investing across all stages of a startup cycle – seed, mid, and growth.

Investing in Indian startups, Sequoia has seen the journey of Indian technology entrepreneurs over the last decade going through cycles of boom and bust as hyper funding due to herd mentality of investors to back potential unicorns was followed by funding freeze around 2016 as multiple startups had to shut shops because of lack of scale. This also led to hyper-competition among startups to attract maximum customers at any cost to jack up valuations as raising funding turned into a proxy for growth.

Also read: Covid-spooked startup funding may not fully recover this year; majority investors not looking for deals

“Due to frequent cycles of intense competition, startups in our region have struggled to grow rapidly with good unit economics, often posting very high losses for the scale of business. This has prevented very large profitable technology businesses in our region from emerging,” Singh said. However, now the Indian startup ecosystem stands at a “fork in the road” and entrepreneurs have a choice to make. “From our vantage point, the future of our region will be shaped by those few founders who are resolutely committed to building enduring companies with unshakable foundations,” he added.

Amid this development has been the change induced by Covid that has pushed startups to learn to operate in a lean manner. Importantly, so far startups have managed to survive the pandemic with the agility in adapting to the dynamic environment. Most of the startups including Swiggy, Zomato, Ola, OYO, and more had cut costs, reduced workforce, prioritized focus areas and new channels of revenues. “For all such founders who are inspired to build the legendary companies that can transform their industries and outlive their founders and early investors, we are thrilled and excited to walk alongside for years to come,” Singh said.

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