Venture capital firm Lightspeed India Partners Advisors LLP has raised a $275-million fund, its third, as it continues to focus on early- and growth-stage opportunities in startups across the consumer Internet and software space.
Lightspeed India Partners III is considerably larger than the $175-million second fund which closed in December 2018. US-based Lightspeed, which is operating in India for 13 years, launched its first dedicated fund for India in 2015.
Since then, it has invested over $750 million in prominent startups such as edtech firm Byju’s, messaging app Sharechat, and udaan, a commerce marketplace.
With its new fund, Lightspeed will focus on emerging segments, such as health and wellness, direct-to-customer brands and fintech, besides other consumer internet segments, Harsha Kumar, partner, Lightspeed, said in an interview. Although analysts, founders and other stakeholders expected a dip in early-stage funding volumes due to covid-19, interest in seed deals in India has in fact bounced back significantly, she added.
“There won’t be any drastic slowdown in deal activity in early-stage or growth stage, because most major economies like the US has been stable… We will, however, have to watch out for macroeconomic indicators and we will take (funding) decision based on these indicators.”
Kumar said Lightspeed will continue to scout for new startups, even as valuations saw “slight” corrections in certain segments that have been impacted by the pandemic.
The VC fund will also continue to reinvest in its existing portfolio firms, she said but did not provide specific names or segments. “We will continue to back most of our existing investments and we will do this even late into their journey, as we stand by our founders, and continue to support them. We may pause reinvestments only if both the founders and the investor are convinced that the interests are not aligned or decide not to push into the market anymore,” she added.
Besides Kumar, Lightspeed has five partners—Akshay Bhushan, Vaibhav Agarwal, Dev Khare, Hemant Mohapatra, and Bejul Somaia. It is one of the few funds in the country that has a woman (Kumar) in its senior ranks. Lightspeed and its affiliates currently manage more than $10 billion across the global Lightspeed platform, with investment professionals and advisors spread across India, Silicon Valley, Israel, China, Southeast Asia and Europe.
Analysts and investors have been expecting the Indian startup ecosystem to come out with initial public offerings (IPOs) in the next financial year as the current scenario have pushed funding timelines and expansion plans in many segments. Sectors like mobility, travel, and hospitality have seen an abysmal impact in term of demand, and recovery is unlikely until the next few quarters.
Yet some segment like edtech, social media, and mobile gaming have seen opportunistic demand in the past two quarters, which may attract fresh funding from early and growth stage VCs.
“We have seen Indian unicorns actively acquiring young startups and indulging in M&As. With big companies like Reliance (RIL) also showing interest in startups, the exit opportunity is interesting in India,” Kumar added.
