Lightspeed Venture Partners to focus more on growth deals
Growth-stage investments typically come after a startup’s first rounds of funding.
Lightspeed has increased its capital base to operate more businesses, the fund said.
“At first, it’s somewhat inevitable that we’ll miss investing in compelling founders and companies, either because we didn’t see those opportunities at the seed or Series A stage, or because we did not fully appreciate them. By increasing our capital base, we are able to invest in some of these exceptional companies and founders a little later in their life cycle,” Lightspeed Partner Bejul Somaia told ET in an exclusive interview.
“This is nothing new for the company globally or in India. What is new is that we have formalized and expanded the effort and now have a dedicated team executing on this strategy,” he added.
Other Lightspeed investments in India include Darwinbox, Yellow Messenger, OK Credit, Apna, Dukaan and Teachmint.
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In 2020, Lightspeed India picked up $275 million from limited partners or sponsors for its third fund to invest in the country.
Prior to that, he raised $180m for Fund II and $135m in his first India-focused fund in 2015.
Active in India since 2007, Lightspeed has invested $1.5 billion here while recording returns from companies such as IEX (IPO), Oyo, Tutorvista, among others.
Lightspeed is considering a larger global growth fund to invest in companies in markets such as India and Southeast Asia. It is likely to hire more people in its India office to execute this strategy.
“We will be increasing the size of our team this year and expect to have a fully-fledged team of eight people focused on India and Southeast Asia by the end of the year,” he said. said Aditya Sharma, partner and head of India growth investments at Lightspeed, who joined the firm in May last year after a 12-year stint at global private equity firm TA Associates.
Blue-chip venture capital funds like Sequoia Capital also have separate growth teams in India, which focus on more mature startups.
Lightspeed is in the process of raising a larger global growth fund, although Somaia and Sharma declined to disclose details.
In 2021 alone, the company used around $300-350 million to support new-age, growth-stage businesses in the country such as Zetwerk, Hubilio, ShareChat, CredAvenue, and Acko Insurance. The firm invested in a total of 50 companies last year in India and Southeast Asia.
The growth platform invests in two global growth funds.
“We have the early growth funds that target checks of $30 million to $75 million, while our late-stage growth funds target investments between $75 million and $200 million. In 2021 we invested over $300m from the growth platform in India where the smallest check was in the range of $25m and the largest was just north of 100 million dollars,” Sharma said.
According to him, the company will actively explore opportunities in sectors such as healthcare, ed-tech, fintech and software as a service (SaaS).
“Some of the growth-stage investments were in net new businesses that we would have missed out on investing in at the start, while some are our own venture-backed businesses where they grew to a certain phase in their journey and we want to continue to support them as they raise larger funding rounds,” added Sharma.
As businesses tap into larger pools of capital from their LPs, there is a need to invest in high-growth businesses and sustain them over a longer period of time. While some companies are raising capital for growth deals, some are taking early bets. Companies such as Chiratae Ventures, Accel, Sequoia India and Blume Ventures have launched programs to tap startups even at the idea stage.
Indian startups landed $34.7 billion in venture capital investments in 1,070 deals in the previous calendar year (2021), according to Venture Intelligence.
Of this aggressive funding environment, Somaia said, “You only find out years later which decisions worked and which didn’t. And when you look around, there are a lot of very smart, informed people making very different decisions.