Venture Capital Investors Plan $2 Billion New Funds for Indian Startups
Tuesday, January 13, 2015
Venture capital investors are on the road to raise nearly $2 billion, or about Rs12,400 crore, in new funds this year to power the next generation of emerging businesses in India’s booming startup sector.
Top-rung investors such as Accel Partners, Kalaari Capital and SAIF Partners — who recently scored rich returns on consumer Internet ventures such as Flipkart and fund-raising momentum that continues from 2014 when venture funds raised over $1 billion for Indian startups.
The uptrend in fund-raising levels indicates a return of confidence in Indian startups among overseas investors, typically pension trusts, corporate endowments and financial institutions who invest in such funds. “We’re seeing a rekindling of interest in the Indian market in the past 6-8 months,” said Karthik Reddy, managing partner at Blume Ventures, a Mumbai-based seed stage investor. “Exits remain a concern among limited partners (investors in venture capital funds),” he said.
More Than 1,200 New Ventures in 2014
“But they seem optimistic that the path to these exits is being built,” he added. India is in the middle of an unprecedented startup boom with more than 1,200 new ventures coming up across the country in 2014. The success of online retailers such as Flipkart and Snapdeal, along with rapid growth in internet usage and mobile and online shopping, has made the Indian startup space a preferred one for investors across the world.
Accel Partners, which manages $230 million in India-focused capital, plans to raise $250-275 million for its fourth India fund. “In the new fund, the investment outlay for each company may go up to $10 million against $5-6 million now,” said a source familiar with the plans. Accel Partners India is an early investor in companies such as Flipkart, Commonfloor and Perfint.