Sequoia Capital Raises $1.35 Billion For Two India-Focused Funds Amid Covid-19
Tiny Owl employees work at computers inside the company’s head office in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Sequoia Capital Raises $1.35 Billion For Two India-Focused Funds Amid Covid-19

Sequoia Capital has raised $1.35 billion as it doubles down on its investments in India and Southeast Asia at a time when economies worldwide are reeling from the Covid-19 outbreak.

The venture capital firm has raised the amount for two of its funds—a $525 million venture fund and a $825 million growth fund—which will help it remain relevant partners for founders at all stages of their journey, Shailendra Singh, managing director at Sequoia Capital, wrote on LinkedIn on Monday evening. The firm has a seed fund, named Surge, to back seed-stage investments.

This comes as a time when investors have turned jittery after the Covid-19 outbreak, with many startups shutting down as they were unable to raise more capital. It has backed Indian unicorns—or startups with valuations exceeding $1 billion—such as the edtech startup Byju’s, online food delivery company Zomato, Rebel Foods and Oyo.

An early investor in companies like WhatsApp, Gojek and Google, among others, Sequoia Capital has been investing in India for more than 14 years. It had last raised $695 million for a fund focused on India and Southeast Asia in 2018.

The venture capital firm had said in March the coronavirus represents a “black swan” event—implying an unexpected disruption with widespread financial impact.

Fork In The Road

“Covid-19 has brought us closer to embracing some hard truths,” Singh said in his post. He said the startup ecosystem in India and Southeast Asia have had a tumultuous journey over the last decade, and during the exuberance investors rushed in to pour large amounts of capital into startups.

“This has, expectedly, resulted in short-term over-funding and hyper competition among startups,” he said. “These periods have been followed by down cycles, cost cutting and negative sentiment.”

Singh said the pandemic has already catalysed a massive change in almost every startup’s trajectory. It has caused a significant course correction such as trimming of costs, prioritising product roadmaps, unlocking of new revenue levers, hiring new talent, and has sharpened leadership, he said.

Our ecosystem has arrived at a ‘fork in the road’.
Shailendra Singh, Managing Director, Sequoia Capital

Singh said the time has come to aspire for “massively” large and profitable companies, and also to build more products that can compete globally on quality, not just on price.

“A new bull cycle for tech startups could soon be on its way.”

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