Fund focus: Lightspeed gets traction in India

The tactic it seemed to pay off as the China business backed successful start-ups such as online-to-offline furniture retailer Meilele and vacation rentals platform Tujia, and then last year raised a second fund of $260 million. Now Lightspeed is looking to repeat the trick in India: its first India fund hit a final close this month at the hard cap of $135 million.

"Our view of the opportunity in India resembles what we saw in China five years ago that caused us to launch our first dedicated vehicle in the country," says Bejul Somaia, managing director of Lightspeed India Partners.

It would appear investors share the GP's enthusiasm, with the fund reaching a first close at its original $100 million target within six months of launch. The new vehicle will follow the same strategy as Lightspeed's global fund, making pre-Series A and Series A investments in areas such as mobile, consumer, e-commerce, media, big data, software-as-a-service, and cloud solutions.

"What is happening here is different from the growth we have seen in other asset classes. There has been a fundamental dislocation in the venture ecosystem and opportunity set in India." says Somaia "This has been driven by both technological shifts and a massive increase in the quantity and quality of start-ups. This differs from other forms of private equity where the story is more about macroeconomic factors: the government and the economy.

Lightspeed has already made investments in India via its global fund, the 10th iteration of which closed in March last year at $950 million. The pre-existing India portfolio includes: budget hotel marketplace Oyo Rooms, which raised $25 million in March; social discovery platform Lime Road, which received a $30 million Series C round the same month; and handicraft marketplace Craftsvilla, which raised $18 million in April.

Dev Khare, managing director with Lightspeed explains that India's venture ecosystem is already nearly a decade old. The new country fund is therefore targeting the second and third generation of start-ups.

"These are entrepreneurs have been around the block a couple of times, and we are now seeing new entrepreneurs coming out of successful start-ups like Flipkart, Snapdeal, InMobi, and others," he explains. "They are very aggressive, they don't play from a defensive mindset, and they want to go disrupt the market whether it be media, retail, logistics, or finance."

Investments out of the new fund are already well underway. Lightspeed India has backed Oku tech, a communicators platform for real estate brokers, on-demand logistics network Town Rush, food-ordering platform Fresk Menu, and local services specialist LocalOye. A further, as yet undisclosed deal is currently in the pipeline.

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• Topics
• Fundraising
• Venture
• Technology
• Consumer
• South Asia
• Fundraising
• Lightspeed Venture Partners
• India
• TMT
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