Sequoia Capital plans largest India fund at $1 billion

Blue chip venture capital firm Sequoia Capital is preparing to raise up to $1 billion for its sixth India-focused fund, according to four people familiar with the development, making it the largest corpus raised for the domestic market.
 
The Silicon Valley-headquartered firm's plans for a new fund come two years after it raised $930 million for its previous India-focused fund.
 
Besides investing in companies in India, Sequoia Capital's local team also leads investments in Southeast Asia and has setup an office in Singapore. This region will be a significant part of the strategy in the upcoming fund for Sequoia Capital India, which manages about $3.2 billion of investments.
 
After a blowout in 2017 for venture capital firms in India, as Chinese and Japanese strategic investors poured massive amounts of capital into domestic companies, Sequoia's gigantic fundraise sets the tone for longterm bullishness among investors in the Indian startup ecosystem.
 
Last year, venture capital investors invested a total $1.3 billion in early and growth-stage companies, show data from deals tracker Venture Intelligence. Sequoia Capital India did not reply to email queries till the time of going to print.
 
While the contours of Sequoia's fund have not been finalised, the sources said the corpus could be raised across multiple vehicles, such as for venture capital focused on technology companies and growth-stage capital focused on consumer and other non-tech investments.
 
The fund could be structured differently from the investor's previous funds with two separate investment committees for each fund, said a person familiar with the deliberations inside the firm. The fund's structure will take another two to three months to be finalised, this person said.
 
"(Sequoia Capital) has run through a good part of its fifth fund already. For the new $1 billion fund, they are figuring out the management structure for both the fund vehicles and that hasn't been crystallised yet," said a second person aware of the developments.
 
A portion of the new fund will be carved out for investments in Southeast Asia-based startups that are being led by managing director Shailendra Singh.
 
The development comes even as FreeCharge founder Kunal Shah, who served as an adviser to Sequoia Capital India, exited after his one-year contract expired in December. Shah confirmed the development, adding that his stint with Sequoia Capital India had been a "great learning experience."
 
Sequoia Capital's most well-known bets in India include restaurant aggregator Zomato, data sciences firm Mu Sigma and education technology firm Byju's. The firm invested about $183 million across 23 deals in India last year, mainly in the technology, consumer and healthcare sectors, show data from Venture Intelligence.
 
The VC firm, which has been among the most active investors in the consumer space in India over the previous two years, has registered great success in the sector as compared to other investors. Its investments in the domestic consumer market include snacks maker Prataap, which listed on the stock exchanges last year, and Fogg deodorant maker Vini Cosmetics.
 
"Sequoia Capital has placed some consistent and big bets in consumer and healthcare. Those are going to pay off in 2018," said a venture capital investor declining to be identified. "There will be more talk about these companies in 2018 through mark-ups and larger funding rounds."
 
At the same time, Sequoia's investments in a slew of hyperlocal companies including Tinyowl, RoadRunnr, and Tapzo have not worked out. Sequoia got a stake in online marketplace Snapdeal when its portfolio company Freecharge, a payments startup, was acquired by Axis Bank last year.
 
Sequoia has sold the Snapdeal stake through a slew of secondary sales of shares.
 
The biggest successes in Sequoia's tech portfolio are its investments in Southeast Asia. The firm made early investments in some of the most valuable companies in the region, including in bike taxi firm Go-Jek that was valued at more than $3 billion recently.
 
Another portfolio company is Indonesia's largest e-commerce company, Tokopedia. Other notable investments in that geography include online travel firm Traveloka and sports brand One Championship.
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