Sequoia Capital to Reduce India Fund by 25%: Report

Venture capital firm Sequoia is reducing the size of its latest India fund by almost 25 per cent. Sequoia Capital is set to raise $650-700 million for internet, consumer, and healthcare companies in India and Southeast Asia, the Times of India reported, citing sources.

In its previous round, it had raised $920 million. The Menlo Park, California-based firm may make larger, growth-stage investments in India from its new global fund, for which it is raising $8 billion.

The reason behind the trimming of funds for its latest India fund is a cautious view of the country’s growing early-stage technology investing ecosystem, according to the report. A part of the new India fund will be used for investments in Southeast Asia-based startups that are being led by managing director Shailendra Singh, according to Inc42. The India team also manages investments in Southeast Asia and has set up an office in Singapore, making the Southeast region an important part of the strategy for the next round. Currently, Sequoia Capital India manages about $3.2 billion of investments.

Sequoia has previously invested in Indian start-ups such as restaurant listing and food delivery app Zomato, hotel booking website OYO Rooms, cab aggregator firm Ola, grocery delivery etailer Grofers, and education app BJYU’s.

In January 2018, the VC firm was prepared to raise $1 billion for the sixth round of funding in India, which would also have been the biggest. According to the earlier reports, the fund would be raised for venture capital focused on technology companies, growth-stage capital focused on consumer and other non-tech investments.

“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 were overestimated in 2014-15,” an investor who has been backing local tech companies told TOI.

The VC firm sold shares in eight of its existing companies for $180 million to Madison Capital in 2017 to get some cash returns in India.

Apart from India, Sequoia operates an independent fund for China as well. The market has generated good returns for the fund. Another branch it had in Israel was shut down to be included in the United States fund.