BYJU’S, OYO Backer Lightspeed Closes $500 Mn Fund To Invest In India, SEA Startups

US-headquartered venture capital (VC) firm Lightspeed on Tuesday announced closing of a $500 Mn fund dedicated solely to India and the South-East Asia region. 

“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,” Lightspeed said in a release. 

The India fund is part of an overarching $7 Bn raised by the VC firm to fund early and growth-stage startups across the globe. 

In addition, the company also promoted partner Bejul Somaia to the global leadership team. Somaia, who founded Lightspeed Ventures India in 2008, will now be part of the VC firm’s strategy and global operations, apart from handling his existing role as an advisor on investments in India, Southeast Asia and Europe.

Lightspeed Ventures has so far invested close to $1.2-1.5 Bn in India via various funding vehicles, including global growth vehicles. This is the fourth India fund of the firm. The last India-focused Fund III was raised in 2020 with a commitment of $275 Mn, while Fund II raised $180 Mn in 2018. As part of Fund I, the company had earmarked $135 Mn for Indian startups back in 2015.

Lightspeed has made a host of big-ticket investments in India. Its portfolio includes category leaders such as BYJU’S, OYO, Udaan, Sharechat, Indian Energy Exchange (IEC), among others.

Its stake in BYJU’S is reportedly pegged at $16.5 Bn, while its investment in Sharechat is estimated to be currently valued at around $3.7 Bn. 

The Menlo Park-based VC firm announced the closing of the fund at a time when investors are wary of investing in startups amid the global economic slowdown. 

Lightspeed has joined a growing number of VC firms who have raised funds to invest in Indian startups. In June, Sequoia Capital India raised its largest ever $2.85 Bn fund to invest in startups across India and Southeast Asia. Matrix Partners India, which counts Ola and VerSe among its portfolio, also said that it was looking to raise a $450 Mn fund to invest in local startups.

In April, Elevation Capital closed a $670 Mn fund focused on startups from India. Prior to that in March, Accel set aside a $650 Mn fund to invest in Indian startups.

Even as VC firms strengthen their India-focused funds, the country has been witnessing a downturn in funding deals. The second quarter of 2022 (CY22) saw funding plummet by a massive 42% to $6.8 Bn from $11.8 Bn in the first quarter of the year.

The deal count also tanked 22% to 393 in the quarter ending June 2022 from 507 in the March quarter. The slump has largely been attributed to rising inflation and fears of a looming recession.