Lightspeed India Partners, investor in Byju's, Udaan and Ula, eyes over $500 million for new fund

Lightspeed India Partners is looking to raise over $500 million for its fourth fund as one of the most successful venture funds in the world's second largest internet market looks to double down on early-stage bets and expand focus to Southeast Asia region, according to two people familiar with the matter.

The firm – whose portfolio includes edtech giant Byju’s, budget hotel chain Oyo, e-commerce Udaan, social media app ShareChat, HR tech DarwinBox, jobs platform Apna and Indonesia’s e-commerce Ula – has received inbound interest to raise over $1 billion, but it is likely to close the fund at slightly over $500 million, one of the sources said.

The ongoing deliberations for the new India fund is part of the global group Lightspeed Venture Partners’ push to raise about $6 billion for a number of its funds, the source said. The India fund is expected to close within the next three to four months, the source said, requesting anonymity as the matter is private. Lightspeed raised $4 billion for several of its funds two years ago.

At $500 million or more, Lightspeed India Partners’ fourth fund will be its largest to date. The firm, which has been operating in India for over a decade and unveiled its first country-specific fund in 2015, closed its third fund at $275 million in 2020.

No major changes in the strategy of how the firm invests are in the works. It plans to continue to back early-stage bets in a variety of sectors with the new fund and also expand its focus on the Southeast Asian region and aggressively explore opportunities in web3, the source said.

The larger corpus will come in handy as the number of startups and the median amount of capital they raise in seed and Series A financing rounds have surged in the country in recent years. Indian startups raised a record $39 billion last year, nearly three times from the previous best of $14.6 billion in 2019.

The firm's global peers / rivals SoftBank, Alpha Wave Global and Tiger Global ramped up the pace of their investments in India last year. SoftBank alone invested more than $3 billion in Indian startups last year and plans to invest up to $10 billion this year, it said. A number of other funds including Insight Partners and Bessemer have became more active in the country in recent quarters.

The deliberations for the new fund comes weeks after Accel unveiled its sixth India fund, at $650 million. Sequoia Capital India is also looking to raise a large fund, the CapTable earlier reported.