Lightspeed India Partners on Tuesday announced it has closed $275 million from LPs for its third fund as the top American venture firm looks to ramp up its investments in the world’s second-largest internet market.
The new fund, its biggest for India, will enable Lightspeed India Partners to make early-stage bets on more than two dozen startups in the region, said Hemant Mohapatra, a partner at the firm, in an interview with TechCrunch.
The announcement comes as the firm, which began investing in India in 2007, has made two high-profile partial exits in the past year (from budget-lodging startup Oyo and edtech giant Byju’s) that together delivered cash returns of more than $900 million.
Some of its other major bets including backing business-to-business marketplace Udaan, which was valued at more than $2.75 billion last year; local social media platform ShareChat, which is in advanced stages of discussions to raise capital at more than $1 billion valuation; and SaaS startups DarwinBox, Yellow Messenger and OkCredit.
The firm, which has six partners in the region, closed its first dedicated fund for India ($135 million) in 2015. In 2018, it closed its second fund for the region, which was $175 million in size. But the venture firm has invested more than $750 million to date.
The Indian arm, which typically invests at early stages of a startup, continues to work with its global mothership for writing bigger checks to support some portfolio startups at later phases. (More than 80% of its investments have been committed to firms at seed or Series A stages in India.)
“That’s one of the strongest points of differentiation we have. There are not many venture firms that have such a global presence. Our synergy with the global fund will continue,” said Mohapatra. (Lightspeed also has a big presence in China. Last year, its China arm announced a $560 million fund.)
Lightspeed, which earlier this year closed a $4 billion fund globally, is one of the handful of American venture firms that aggressively scouts for deals in India. Sequoia, its global peer, announced two venture funds, of $1.35 billion in size, last month for India and Southeast Asia. Eleven of its early-stage bets have grown to become unicorns in the last 14 years in this region.
Mohapatra said the Indian startup ecosystem has matured in recent years, demonstrating high-scale growth and delivering big outcomes. It’s also seeing more exits than ever before. Earlier this month, Byju’s acquired WhiteHat Jr., an 18-month-old startup that teaches coding to children, for $300 million in an all-cash deal.
Indian startups raised more than $14.5 billion last year — a record for the local community. The coronavirus has decelerated the funding spree in India, like in any other market.
Mohapatra said a fraction of the firm’s portfolio startups has been disrupted by the virus, but noted that most startups are marching ahead unfazed and some have accelerated in recent months.
“Lightspeed believes this is when the best entrepreneurs and companies of the future will emerge. Strong founders are utilizing the tailwinds of India’s digital ecosystem growth to build out a new future and Lightspeed is strongly committed to backing these founders,” the firm said in a statement.