VC firm Accel has raised a new $550 million fund three years after mopping up $550 million, according to senior executives. Accel continues to focus on early, seed and pre-seed stage startups.
Accel has announced its seventh India fund, with $650 million to invest, as the storied venture investor looks to double down on its bet on the world’s second-largest internet market while also being more aggressive in the Southeast Asia region, according to two partners in an interview with TechCrunch.
The new fund’s first batch of checks are likely to be wired within weeks, less than two and a half years after Accel revealed its sixth fund in late 2019.
One of the early investors in India, the Silicon Valley venture capital company has a substantial portfolio of unicorn firms in the South Asian country. Among its prominent investments are Flipkart, which sold a controlling interest to Walmart in 2018; and Freshworks, which went public last year; Swiggy, a prominent food delivery firm; FalconX, an institutional crypto trading and management platform; Spinny, a used-car marketplace; Vedantu, an online learning platform; and Zetwerk, Infra.Market, and Moglix, a business-to-business marketplace.
Accel is the first institutional investor in a business in the great majority of its backings, according to Shekhar Kirani, a partner at Accel. For example, it took part in the seed round of e-commerce business Flipkart, which was then valued at $4 million post-money. Walmart paid $16 billion for a controlling share in Flipkart. (As a result, Accel received more than $1 billion from Flipkart, which is currently valued at more than $36 billion.)
Some of the firm’s top-performing startups have a combined worth of more than $100 billion, he claims.
Kirani, who has worked with the business for a decade, attributed the success of the Indian startup in the last decade to the creation of rails such as the payments infrastructure UPI and the taxes system GST. He predicted that the Indian economy would outperform the previous decade’s growth within a few years.
According to Barath Subramanian, another Accel partner, the firm intends to be more competitive in some industries, such as web3 and business-to-business markets. The business, which began investing in Southeast Asia a few years ago, also wants to be more active in the area with the new fund, according to the press release.
Accel now competes — or, as its partners would put it, collaborates — with a number of rival US funds, including Sequoia Capital India and Lightspeed Venture Partners. Unlike many of its competitors, Accel has been notably more conservative, giving less cheques and turning down businesses if they don’t believe they can work with the founders.
“We have to work with a startup for the next ten years.” “It’s critical for us to know that we can all work together,” he remarked.
Since Accel’s initial visit to India, a lot has changed in the Indian startup environment. Last year, local businesses raised a record $39 billion, up from a few million dollars a decade earlier.
“The public market usually sets the tone for private market because eventually all these startups have to go public and have to list at the right valuations. The public market in 2019, 20, and 21 went through the roof in terms of multiples and you saw its reflection in the private market,” he said.
“That valuation multiple also benefited our startups as well. But the only thing I would say is that if you look at our companies, they are all good, durable-unit-economics companies and not fluffy-without-revenue companies. So we have been very cautious and careful as we have been traditionally very conservative. We don’t like our founders go gaga over valuations and keep raising money,” he said.
However, there are indicators that investors may have been too bullish in their pricing of several businesses in recent quarters. Last year, Tiger Global, Alpha Wave Global, and SoftBank were particularly active in India. Because of the valuation and amount of financing they gave to companies, the former two won numerous agreements.
Some arrangements were also disputed by the businesses since they did not battle for numerous future rights. As difficulties with this method have emerged in recent months, many investors have begun to become more conservative again, putting back future rights and lowering values.