The Silicon Valley-based firm, which registered exits of nearly $900 million last year from its two top bets – Oyo, and partly from Byju’s, has till date deployed about $750 million in India across two dedicated funds and its global arm.
Lightspeed’s typical first cheque is $1-$3 million depending on the stage of the business as well as competitive dynamics in the aggressive early-stage deal-making market.
Bejul Somaia, partner, Lightspeed Venture Partners told ET that global Limited Partners (LPs), or sponsors in funds, still view India as a discretionary asset class. “LPs are still inclined to be selective… that said, there is a broad belief in the digital opportunity in India,” he said, commenting on the overall fundraising process. The new fund, which will continue to back early-stage startups, will start deploying capital in the last quarter of calendar year 2020. Last month, Sequoia Capital India raised $1.35 billion to deploy in India and Southeast Asia. In 2015, Lightspeed raised its first India-dedicated fund of $135 million, followed by a second fund of $175 million in 2018.
“The size of our fundraises was proportionate to the early-stage opportunity at that time…also, as a global firm…we have several funds to double down our commitment should the opportunity present itself,” Dev Khare, partner, Lightspeed said. In April, Lightspeed announced the closing of three new global funds totalling $4.2 billion.
Exits in India
Earlier this month, Lightspeed portfolio company Byju’s bought smaller ed-tech startup WhiteHat Jr for $300 million in cash. “Most acquisitions in any economy come from local buyers. In the past, there haven’t been many scaled companies that could make these offers. Now, we are seeing companies get to scale in India. Reliance (Industries) could potentially become one of those buyers as well,” Hemant Mohapatra, partner, Lightspeed said.
The Covid-19 pandemic has forced businesses to cut down on excessive cash burn and build slowly but profitably.
“A lot of companies are structurally and economically stronger now than six months ago. They may be a little smaller but far healthier,” Somaia said. For young companies, regulatory curbs about picking up investments from China, one of the largest backers for Indian businesses, coupled with the largest Indian conglomerate Reliance Industries aggressively doubling down on technology businesses, has also proved stressful.