With $650 million to invest, Accel has announced the launch of its eighth India fund as the illustrious venture capitalist seeks to increase its stake in the second-largest internet market in the world and to up its game in Southeast Asia.
The first batch of checks for the new fund is anticipated to be wired within a few weeks of its announcement, which comes less than 2.5 years after Accel revealed its sixth fund in late 2019.
One of the first venture capital firms to invest in India, the Silicon Valley firm has a sizable portfolio of unicorn enterprises there.
According to Accel partner Shekhar Kirani, in the great majority of the startup’s Accel backs, it is the first institutional Investment. For instance, it took part in Flipkart’s initial fundraising round, which was valued at $4 million at the time post-money. For $16 billion, Walmart acquired a controlling interest in Flipkart.
The combined valuation of some of the company’s best-performing startups is greater than $100 billion, he claimed.
The rise of the Indian startup in the previous ten years, according to Kirani, who has been with the company for ten years, was specifically attributable to the emergence of railways like the payments infrastructure UPI and the tax system GST. In a few years, he said, the Indian economy will grow faster than it did over the previous ten years.
Another Accel partner, Barath Subramanian, claims that the company wants to increase its competitiveness in a few markets, including web3 and business-to-business marketplaces. With the new fund, the company, which started making investments in the region a few years ago, also aims to be more aggressive there, according to the sources.
Sequoia Capital India and Lightspeed Venture Partners are only two of the peer U.S. funds with which Accel currently competes, or as its partners would put it, collaborate. Accel has clearly been more cautious than many of its competitors, giving few checks and shunning businesses if they don’t think they can cooperate with the founders.
“They have a 10-year contract with a startup. It’s crucial for them to realize they can all cooperate, he said.
The startup landscape has seen significant transformation since Accel first came to India. Local companies raised a record $39 billion last year, compared to just a few million dollars a decade earlier.
However, there are indications that investors may have overestimated the value of several firms when setting their prices in recent quarters. Tiger Global, Alpha Wave Global, and SoftBank all made sizable investments in India last year. Due to the valuation and amount of funding they provided to entrepreneurs, the first two closed several agreements.
Due to the fact that they did not battle for many future rights, the firms also claimed some deals. As issues with this strategy start to surface in recent months, many investors are starting to return to being more cautious, rolling back future rights, and lowering values.
Since every business eventually needs to go public and list at the appropriate values, the public market typically sets the tone for the private market. The public market is available in multiples in 2019 through 20 and 21. According to him, this is because it “went through the ceiling,” as you could see in the private market.
“Their startups also benefited from that price multiple. The only thing he would add is that if you look at their businesses, they are all solid, long-lasting businesses with unit economics rather than frilly businesses with little revenue. They have a history of being quite conservative, so as a result, they have taken extraordinary prudence. They dislike it when their founders get obsessed with valuations and keep seeking funding, the man said.
Faq’s
8
$650 M
Yes
Silicon Valley firm.
10 years
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