Global venture capital firm Lightspeed Venture Partners has raised $500 million in funding for India and Southeast Asia as it seeks to double its investment in startups across sectors.
Lightspeed made its first investment in India in 2007, and has backed many unicorns such as Oyo, Udaan, Byju’s, Razorpay and ShareChat. It will now invest more in early stage startups with fresh funds.
It has significantly increased the size of its Fourth India Fund from its previous corpus of $275 million, which it raked in 2020.
“The closing of Lightspeed India IV at its $500M hard-cap reflects the firm’s deepening commitment to the India and South East Asia region, since our first India investment in 2007,” the VC firm Lightspeed said in a statement.
The India Fund is part of the $7 billion that Lightspeed announced to be fully deployed in early- and growth-stage companies globally.
“We continue to witness the broadening and deepening of the opportunity in the region, led by world-class founders and an ever-expanding scope for technology to reshape the economy in India and Southeast Asia,” the firm said.
Lightspeed partner Bejul Somaia, who founded the fund’s India franchise in 2007, has been promoted to its global leadership team and will spend time between the US, Europe and India. He will serve on various investment committees in addition to his current role of overseeing India.
Lightspeed Venture Partners currently has nine partners in the India team.
“The opportunity continues to broaden in scope… founder quality continues to improve, technology adoption is accelerating, and we’ve begun to see venture-backed companies get public. All these developments give us confidence in the India and Southeast Asia opportunity,” said, Bejul Somaia, Partner, Lightspeed.
The fund will reduce checks from $500,000 to $15 million and focus on seed to Series B investments, with growth capital coming from its global vehicles. Even as India-dedicated VC firms raise large sums of money from limited partners, or sponsors, in the fund, they have broadened the scope and geography of their investments.
Somaia said the VC firm’s push towards growth investments will not change amid a lull in funding of late.
“When we commit resources to a market, it’s really done with a very long-term view… What’s clear is that this region matters to us, and it will take some time for the growth markets to adjust and find a new equilibrium. That’s okay, it doesn’t change our view of the market,” he said.
“We’re not yet seeing any significant changes in early-stage valuations… What we have begun to see is a slight reduction in the pace of activity and a flight to quality… What that means is that if there’s an early-stage opportunity with a really strong team, they will likely be able to raise at around the same levels that they might have raised six months ago,” Somaia added.
On improving valuations of technology firms in both the public and private markets, Somaia said, “These periods, as difficult as they are, are necessary. While one can’t predict how long it will last, we expect it to be longer than previous cycles because there are a whole bunch of factors in the mix.”
“At the beginning of the year, we started engaging with founders, sharing what we were seeing and encouraging them to adjust to what’s coming… Companies have to cut burn, they’ve got to make their capital go further, they’ve got to clearly show that the underlying economics work,” he added.
According to Lightspeed, over the past five years, it has expanded to 28 professionals across four locations—Bengaluru, Delhi, Mumbai and Singapore.
About Lightspeed Venture Partners
Lightspeed Venture Partners is a multi-stage venture capital firm focused on accelerating disruptive innovations and trends in the Enterprise, Consumer, and Health sectors.
Over the past two decades, the Lightspeed team has backed hundreds of entrepreneurs and helped build more than 400 companies globally, including Snap, Affirm, Nest, Nutanix, AppDynamics, MuleSoft, OYO, Guardant, and GrubHub. Lightspeed and its affiliates currently manage $10.5B across the global Lightspeed platform, with investment professionals and advisors in Silicon Valley, Israel, India, China, Southeast Asia and Europe.