New Delhi: Accel, one of the most prolific venture investors in the country, is all set to raise $400-500 million India-focused fund.
The fund which is expected to close by the year-end, comes at a time when the top six Venture capitals (VC) have combined more than $2.5 billion in the past year to invest into Indian start-ups.
Last year, Accel, who was also a sponsor for Flipkart, doubled down its investments with numerous cheques for $5,00,000 to $1-2 million.
"Initial conversations about the new fund have already begun with limited partners, or LPs (investors in funds). The amount is yet to be finalized, but it will be larger than their previous fund size," a person privy to the information said in the report.
Accel had officially announced its Indian Fund IV in March last year.
Also in March, Accel US, famous for its investment on social networking site Facebook in 2005, announced that it had raised around $2 billion, split between a $500-million early-stage investing corpus and $1.5 billion for later-stage, growth investments.
Accel started to invest in India from 2008 when it acquired Erasmic Venture Fund and has since then it has backed companies like BookMyShow, Freshdesk and Myntra, besides one of its huge investment Flipkart where it put $1 million in 2009. It is currently organising $305-million India Fund IV, which has been invested in startups like food-delivery venture Swiggy, local services app UrbanClap, and rental marketplace RentoMojo.
"The lack of exits for investors in India is a symptom of the problem. The real problem so far was the lack of depth in the market. So a lot of money was invested without a deep enough market opportunity. However, looking out at the next ten years, investors in the VC asset class in India realize the market depth has arrived and exits shall follow,” says Avnish Bajaj, MD at Matrix Venture Partners, an investor of Ola and Quikr.
Last year Kalaari Capital, SAIF Partners, Lightspeed Venture Partners, Nexus Venture Partners and Accel were flooded with new capital for the fast-growing domestic startup ecosystem. But, the first quarter of 2016 has slowed down, with a drop of at least 50% in deal value at $301 million.
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