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Global venture capital (VC) and growth investor Sequoia Capital has raised $2.85 billion (Rs 22,240 crore) across a set of funds to continue financing entrepreneurs to invest in Southeast Asia and India.

Introducing a first dedicated Southeast Asian fund worth $850 million, Sequoia will invest the remaining substantial portion towards the Indian venture and growth funds at $2 billion.

“Today we are pleased to announce the launch of our first dedicated SEA fund, Sequoia SEA Fund I, an $850 million corpus that we will use to partner with the next generation of founders on a mission to build enduring companies from the region...The new funds will bolster our mission to help daring founders to build legendary companies from idea to IPO and beyond,” the private equity firm said in a blog post.

This is a record fundraise by any venture capital fund in India so far. Over the last year, global and domestic private equity and VC firms which have launched or raised such funds include Edelweiss Alternative Asset Advisors ($1.3 billion), Brookfield Asset Management ($1.04 billion), ChrysCapital (around $1 billion) , Kedaara Capital ($750 million) and Motilal Oswal Private Equity (MOPE) ($550 million).

At Sequoia India and Southeast Asia, we intend to double down on our efforts to help founders build healthy companies that will endure… Last year, India emerged as the third-largest startup 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 further said in the post.

With the new fund, Sequoia Southeast Asia will continue to invest actively at the seed, Series A, and growth stages in companies across our region, it added.

The post further said, "In the last couple of years, we have witnessed the emergence of a thriving web3 ecosystem and also seeing new waves of innovation in markets like Vietnam, Philippines, Thailand and Malaysia."

Funding crunch

Meanwhile, the record funding announcement comes amid a stock market crash diluting valuation of digital companies including Zomato, one of its portfolio investments.

It also comes at a time when the overall startup ecosystem is undergoing a funding crunch along with a correction in valuations, which jumped with a bumper fundraising activity in 2021. Despite a dip in the fundraising frenzy, investors like Sequoia are bullish on early-stage bets in stable business models with a path to profitability.

According to the California-headquartered firm, "This fundraise, which comes at a time when 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. The new funds will bolster our mission to help daring founders to build legendary companies from idea to IPO and beyond."

Incidentally, the fund closure had been delayed as the VC firm had been embroiled in alleged financial irregularities and corporate misgovernance at some of its portfolio firms such as BharatPe, Trell Zilingo.

Sequoia-backed apparel firm Zilingo Pte removed Ankiti Bose as CEO last month hiring an independent financial adviser to look at the company’s future options. Indian B2B payment unicorn BharatPe also fired their co-founder on pretext of financial irregularities while Trell is facing forensic audit.

Recently, in an unusual move, Sequoia Capital has also cautioned its portfolio companies against doing business with Algo Legal, a law firm run by the VC firm’s former general counsel in India. 

Sequoia’s fresh corpus comes after two years of Sequoia’s $1.35 billion (about Rs 10,030 crore) as a venture and growth fund for India and SEA that was announced in July 2020. Last year in March, it had also closed a $195 million (then around Rs 1,419 crore) for a second seed fund for the two regions. 

In India, the Silicon Valley venture capital firm intensified its focus on early-stage bets when it launched the Surge programme in January 2019.

So far, it has invested in over 400 startups across India and Southeast Asia, with 36 of them valued at more than $1 billion, including Byju’s, 1mg, Bira, Blinkit (formerly Grofers), Cars24, Meesho and Freshworks, among others. A total of 13 new firms have gone public.

Globally, the investor is an early backer of tech giants Google, Apple and WhatsApp.

This year also marks Sequoia Capital’s 50th anniversary and its tenth year in Southeast Asia.

Sequoia India has expanded its geographic reach to include Southeast Asia, betting on startups like Gojek and Tokopedia, which have merged to form GoTo Group, Indonesia’s largest publicly traded internet company.

Sequoia India and Southeast Asia today manages over $9 billion in assets.

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