Sequoia may resort to its $6-7 billion worth global growth fund for setting up the India-focused fund.
US-based venture capital firm Sequoia Capital will reduce the size of its new fund to be utilized in India, reported The Times of India.
Sequoia is likely to slash the new India fund by about 25 percent considering the risk factor involved in early-stage technology investment in the startups in India, said the report.
Sequoia, a leading investor in Indian technology startups, will be raising about $650-700 million for its sixth India Fund. The company was set to cross the $1 billion mark for the sixth India fund this year. It would have been the largest fundraising by the company to be invested in India if Sequoia had decided to go ahead with the decision.
The sixth India fund will be utilized for internet, consumer and healthcare companies in India and South Asia. The company had accumulated $920 million for its fifth India fund a few years back.
The fund will be raised in different ways with a focus on both technology companies and non-tech startups. Sequoia may also constitute separate committees for the management of these funds, say media reports.
Sequoia may resort to its $6-7 billion worth global growth fund for setting up the India-focused fund.
The decision of the VC firm seems to be logical based on the conditions prevailing in Indian startup ecosystem. “Smaller-sized funds in the $150-300 million range seem the most appropriate for India right now. Billion-dollar exits for VCs are still based on paper valuations. It is clear that the scope and opportunity of the internet space was overestimated in 2014-15,†an investor associated with local tech companies told The Times of India.
While the investors find it difficult to make higher returns from technology startups, focus on the consumer and non-tech sectors have improved in recent years.
By setting up a new office in Singapore, Sequoia has turned its focus on investments in Southeast Asia. China is another country where the firm has made significant investments.
Sequoia, which started operations in India in 2006, has invested in about 100 companies in the country including Zomato, data sciences firm Mu Sigma, Grofers, cab aggregator Ola, and edtech startup Byju’s.