Venture capital firm Accel India on Monday said it had raised $550 million, or Rs 4,000 crore, for its sixth fund to invest in early-stage technology companies in India.
Accel India was setup in 2008 by Mahendran Balachandran, Subrata Mitra and Prashanth Prakash and is regarded as one of the top VCs. As of date, it has 117 active investments and 44 of its portfolio firms are valued over $100 million.
Announcing the new fund, Accel said it will focus on its core areas: consumer, B2B (business-to-business), software, fin-tech and health-tech, and support companies with patient capital. The fund, managed by nine partners, will invest at seed and series A stages, and support the portfolio through growth rounds.
Before this, Accel had cumulatively raised $1billion across five funds. Fund one and two have been returned to the investors while rest are still being deployed.
Fund six, its biggest so far, will be deployed over three-four year, venture partner Anand Daniel said. It comes at a time when its peers Lightspeed, Sequoia and Chiratae (formerly IDG Venture Partners), too, are out to raise new funds.
The move is an indicator that LPs are interested in start-up investing despite Indian economy showing signs of a slowdown. Investors are bullish on the entrepreneurial potential in India but want to see a steady stream of public offerings in the future, said Accel India co-founder Subrata Mitra.
Private investments in start-ups itself are at an all-time high. According to Nasscom, tech start-ups raised $4.4 billion in the first nine months of 2019 compared to $4.2 billion over the whole of last year. Also, seven new start-ups have attained billion-dollar valuations this year.
The latest fund is also an affirmation of Accel’s track record. It was the first investor in Flipkart, putting in a measly $800,000 in 2008. Last year, Walmart acquired Flipkart at a valuation of $21 billion and Accel is said to have made $800 million - $1 billion, on total investment of $125 million, while still retaining some stake.
It also put $1 million seed money in Swiggy, that sky-rocketed to become the top food-tech player in the country valued at $5.4 billion. Its other bet on software major Freshworks, recently valued at $3.5 million, is preparing to go public last year. Besides, it is an investor in hugely successful businesses Bookmyshow, Blackbuck and Cure.Fit—all near or past the billion-dollar valuation market.
Recently, the firm had started experimenting with newer areas. It backed social e-commerce firm SimSim and insurance platform Acko, among other tech-enabled start-ups. Accel also runs an incubator programme Accel Launchpad to support very early stage start-ups.
"The opportunity is still very large," said Accel’s Mitra. "India can now digitally identify 1.3 billion people, has 600 million internet users and 150 million online transecting customers with a national payments platform that processes $20 billion a month, he said.