Despite a stock market crash shaking digital companies, Sequoia India and Sequoia Southeast Asia raised $2.85 billion across three funds to continue financing entrepreneurs in the region. Sequoia is introducing a specific Southeast Asian fund worth $850 million for the first time, while the Indian venture and growth funds will receive $2 billion.
Sequoia Capital has raised $2.85 billion to deploy across startups in India and Southeast Asia, the largest dedicated corpus for the region by a risk investor. It will utilise $2 billion across its India venture and growth investments, while the remaining will go to the south east asia companies. This is the first time that Sequoia has demarcated allocations separately for India and Southeast Asia (SEA), geography where it has been active over the past five-six years with bets like GoTo (the combined entity of GoJek and Tokopedia), One Championship, and Zilingo.
According to the SEC filings and earlier fundraising announcements, this now takes Sequoia’s total committed capital in India and South East Asia to $9 billion over the past 16 years.
“Sequoia India and Sequoia Southeast Asia have collectively raised $2.85 billion across a new set of funds, including India venture and growth funds and a $850 million Southeast Asian fund – the firm’s first dedicated fund for that region,” the statement said.
This is the largest fund raised by any VC firm in the region, it added. Sequoia has had a stellar run in the last few years, witnessing nine IPOs of companies it funded and $4 billion of exits in the last 18 months. The firm has 36 unicorns in the region, including the likes of Zomato, Unacademy, Pinelabs, Byjus and Razorpay.
Last year, India emerged as the third-largest start-up ecosystem in the world, after the USA and China. Southeast Asia, meanwhile, is on track to become a $1 trillion digital economy by 2030. Sequoia has been present in India for the past 16 years and in Southeast Asia for ten.
“The firm has partnered with more than 400 start-ups across multiple sectors, stages and market cycles and has 36 unicorns in its portfolio. Between 2021-2022, the VC firm saw nine IPOs, with notable ones like Freshworks and Zomato,” the statement said.
Sources in the know said the fund will plough $300 million from its India venture and SEA vehicles for seed-stage investments under Surge. Sequoia has so far deployed $6 billion in India and SEA across more than 400 firms since launching its India franchise back in 2006.
The Silicon Valley headquartered blue-chip venture capital firm has backed Indian startups such as food delivery app Zomato , Software as a Service firm Freshworks, social commerce company Meesho, and edtech unicorn Byju’s. Globally, the VC firm is well known for being an early backer of tech giants including Google, Apple and WhatsApp. This is its largest India-focussed fund, exceeding those raised by other private equity and VC firms such as Edelweiss, Alternative Asset Advisors ($1.3 billion), Brookfield Asset Management ($1.04 billion), ChrysCapital ($950 million) and Kedaara Capital ($750 million), as per data from Venture Intelligence.
The development comes after it recently told its Limited Partners (LPs), or sponsors in the fund, that it had decided to postpone the close of its latest amid an investigation at one of its portfolio firms.
“This fundraise, which comes at a time when the markets are starting to cool after a very long bull run, signals our deep commitment to the region and the faith our Limited Partners have in the long-term growth story of India and Southeast Asia,” Sequoia India said in a blog post. The new funds will bolster its mission to help “daring founders” build legendary companies from idea to IPO and beyond, it added.
“…we intend to double down on our efforts to help founders build healthy companies that will endure … There’s a strong sense in the emerging economies and fast-changing societies across India and Southeast Asia that ‘now is our time’. Many large companies with regional or global footprints will emerge from this region in the decade to come,” it said. Last year was a record-setting one for Indian startups, which cumulatively raised $36 billion, according to data from UK-based investment data platform Preqin. Companies such as Zomato,Paytm , PolicyBazaar and Nykaa went public last year.
However, 2022 started off with a bunch of Sequoia portfolio entities like fintech firm BharatPe, social commerce venture Trell and Singapore-based wholesale e-commerce platform Zilingo courting controversies for alleged lapses in corporate governance, leading to the ouster of BharatPe founder Ashneer Grover and Zilingo cofounder and CEO Ankiti Bose.
In March last year, Sequoia closed its second seed fund at $195 million, as it looked to back early-stage startups across India and Southeast Asia under its Surge accelerator programme. In 2020, the VC firm said it had received commitments totaling $1.35 billion from LPs for two new India- and Southeast Asia (SEA)-focussed funds — a $525-million venture fund, and an $825-million growth fund.
The flood of venture capital directed at Indian startups in recent years was drying up, as investors take a cautionary approach. Between April 1 and May 16, there were only nine funding rounds of more than $100 million, cumulatively amounting to a little over $2 billion, compared to 27 such deals in the January-March period this year, according to data sourced from New York-based analytics platform CB Insights. Unicorn rounds – which catapulted 42 companies to the once-elusive club in 2021 – have also come to a halt. Till date, only 17 startups valued at over $1 billion have been birthed this year, with April and May seeing only five such deals.
