Rahul Taneja, Partner, Lightspeed India

Rahul Taneja, Partner, Lightspeed India

At a time when foreign investment in Indian startups has slowed significantly, global venture capital (VC) firm Lightspeed Venture Partners is accelerating investments in sectors such as consumer tech, fintech, enterprise tech, artificial intelligence (AI), climate tech and electric mobility. Is. Said in the firm.

“Between 2022 and 2023, venture capital funding in India is set to decline by more than 65 percent. However, we remain balanced in our pace of investment in India. The number of investments remained almost the same in the two years. We made 20 to 25 investments last year, have been consistent and will maintain the momentum,” said Rahul Taneja, partner, Lightspeed India. The company has invested in Oyo, ShareChat, Udaan, Pocket FM and Byju’s, among others.

According to data from market intelligence platform Traxon, total foreign investment in the country declined by 66 per cent year-on-year (YoY) to $7.7 billion in 2023. This is less than $23 billion last year. Despite this, Lightspeed’s investment has remained relatively stable.

According to data from market intelligence platform Traxon, total foreign investment in the country is set to decline by a massive 66 per cent year-on-year (YoY) to $7.7 billion in 2023 from $23 billion last year. Despite this, Lightspeed’s investments have remained relatively consistent.

Lightspeed made 13 equity investments totaling $698.4 million in 2023, up from nine investments last year totaling $251.1 million. It has made two equity investments worth $55.3 million through the first quarter of 2024.

At the same time, investments from other big global VCs like Accel, Peak XV Partners, SoftBank and Tiger Global fell by up to 85 per cent, Business Standard had earlier reported.

“If there is any market in the world to invest in right now, it is India. There is some rebalancing in capital allocation happening around the world. Many limited partners (LPs) are reevaluating their exposure to China and increasing weighting towards India, Taneja said.

He said Lightspeed’s continued investment momentum is a result of taking a long-term approach with its bets.

“We believe in investment, not deployment. The investment is about supporting the right founders in the right markets to deliver better returns for our LPs, Taneja said.

Taneja said Lightspeed’s investment is not based on short-term upside.

“We remain invested in companies for an average period of 8-9 years. When you have invested for such a long time, you cannot invest on short-term booms… Just because the market is getting hot, we will not make 35-40 investments in a year. We do not optimize the numbers (of investments), the numbers are a result,” he said.

Lightspeed, which invests in both early- and growth-stage investments, began investing in India through its global fund in 2007. Since then, it launched its first dedicated fund for India and Southeast Asia in 2015 with a corpus of $135 million.

The firm launched two more funds for the sector, one of $275 million in 2020, and its latest and largest fund of $500 million in 2022.

“We have been deploying from LSIP IV for almost a year. This is our largest fund to date, and is being invested in both India and South East Asia. We do not have any specific allocation between Southeast Asia and India, Taneja said.

Within India, the company is investing in companies that are “building for India, or building in India for the world”, across enterprise software-as-a-service (SaaS), fintech, cross- In areas such as border commerce and consumer technology. ,

“AI is a huge area where we are now investing both globally and in India. Globally, over the last 18 months, we have invested nearly $1 billion in AI. In India/Southeast Asia, we have invested in several companies – Sarvam, Thena, Portkey, Marco and Gushwork, Taneja said.

The company’s investments will focus on early- and growth-stage capital.

“The early-stage market (from seed to Series B) has remained active over the past two years despite the so-called funding winter. If anything, it’s a good time to invest early stage because valuation expectations are very different now than they were two years ago. “The quality of founders is also very different compared to when money was easy to come by,” Taneja said.

On the other hand, development investment is expected to pick up pace during the second half of this year.

“We are already starting to see signs of some big deals happening. And, he will get progressively better. That part of the market is still a bit sluggish, but it will improve, Taneja said.

The funding winter has made the business model and valuation more realistic, he said. As such, the overall funding for Indian startups is expected to improve compared to last year.

first published: 17 April 2024 | 9:57 pm First


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