Accel Partners, which has backed global Internet majors like Facebook and Groupon, has raised a new $155 million venture capital fund that will invest in seed and early-stage investments in India. Accel India III is nearly two-and-a-half times its predecessor, Accel India Venture Fund II, which raised $60 million three years ago. With the inception of the new fund, the assets under management of Accel India will reach $235 million across its three early-stage funds.
“The fund has attracted top-tier institutional investors from North America, Europe and Asia, and will focus on opportunities in Internet services, digital media, SaaS and enterprise technologies, mobile, healthcare and education, and other high-growth sectors,” Accel said in a statement.
The new fund comes as Indian e-commerce space has gained momentum and one of Accel’s early bets on the sector, Flipkart, is attracting interests from global investment majors. Accel has invested in nearly half-a-dozen e-commerce companies such as Babyoye, Exclusively.in, Flipkart, Letsbuy and Myntra. Its other India investments include Cnergyis, enStage, Deeksha (Ace), HealthcareMagic, Kaatizone, MuSigma, Perfint, QwikCilver, Sconce, Vinculum and Virident. Accel currently has 34 portfolio companies in India.
Accel, which has $8 billion under management globally, had set up India shop in 2008 after it merged Bangalore-based early-stage investment firm Erasmic Venture Fund with itself. Erasmic already had a $20 million fund in place and post-merger with Accel, it raised another $60 million India fund. Accel Partners has 11 investment professionals based in India, led by the four Partners – Mahendran Balachandran, Shekhar Kirani, Subrata Mitra and Prashanth Prakash.
Kirani, former India operations head of VeriSign Inc. who joined Accel earlier this year as venture partner, has been elevated to the role of Partner for the new fund. Gagan Kumar, who was one of the Partners at Erasmic and Accel India Venture Fund II, is now part of the venture development team at Accel India, according to its website.
“Accel appreciates the support for this fund from our greatly valued and longstanding investors. Our core strategy in India will continue to be the same – to be the first investment partner of choice for entrepreneurs right from company inception or the very earliest stages. Accel will continue with its highly engaged model of company-building,” said Sameer Gandhi, a US-based Partner at Accel Partners.
“While traditional venture capital and growth equity have been increasingly drawn to India over the past years, the true seed and early-stage markets are still under-served, attracting relatively smaller amounts of capital. We have seen a significant increase in entrepreneurial activity in the past few years and in particular, we are pleased to see strong momentum from Internet companies in India. We believe that our global experience and expertise will help us become the preferred partner for many top-class entrepreneurs in this space,” said Subrata Mitra, Partner at Accel Partners.
Early-stage Funds Gaining Traction
Limited partners (LPs) are increasingly looking at venture firms in India as they seek differentiated exposure to general partners (GPs) in the country and as the early-stage ecosystem matures. Over the past two years, venture capital investments in Indian start-ups have started showing returns and some firms have also shown the ability to become significant players at a global stage. Bangalore-based mobile ad network InMobi, most of whose revenues come from developed markets outside India, has recently raised $200 million from SoftBank Corp at a valuation rumoured to be around $900 million.
Some profitable exits since 2010 include those of InMobi (Mumbai Angels), Mango Technologies (Ojas Venture Partners), Metahelix (Nadathur Holdings), Carwale (Seedfund) and MakeMyTrip (SAIF Partners).
This has also started to convert into commitments as earlier this year, Seedfund closed its second fund with a total investment corpus of $54 million. IndoUS Venture Partners, a venture capital firm which has backed companies like Snapdeal.com and Via, has raised up to $97.5 million for IndoUS Venture Partners II, LLC, which is said to be targeting $150-175 million. Rural India and bottom-of-the-pyramid-focused early-stage investor Aavishkaar made a first close of its second fund at $62 million.
New players are also joining this asset class. Nirvana Venture Advisors is raising a $75 million venture fund anchored by the Patni family and roped in former eBay India country manager Rajan Mehra as its managing director in June this year. Kae Capital, an early-stage fund floated by Sasha Mirchandani (former India head of the US-based VC firm BlueRun Ventures), is also looking to raise $25 million. Then there are other players like Blume Ventures and IncuCapital in the seed and early-stage investment fields.