Accel maintains its India fund size. $650 million for his eighth carOther venture capital firms in the region are still competing to raise larger pools of capital.
Accel partner Shekhar Kirani said in an interview with TechCrunch that the company “has a lot of opportunity to raise billions of dollars.” But unlike peers who have made their funds large-scale; Accel has a firm grasp of India's venture opportunity based on calculated analysis.
There is Peak XV. It raised $2.5 billion in its latest round of funding. for the region Almost lightspeed. It doubled its India funding to $500 million. in recent years. Stellaris, which launched in 2017 with $90 million in funding, recently announced its third funding round of $300 million.
“We did a lot of historical studies in the US and China. As the fund exceeded $600 million to $650 million, Historically, Even in well-established markets, building high-quality results is very difficult,” Kirani said.
The strategy mirrors that of US firm Benchmark, which has maintained small fund sizes for decades while delivering large returns. According to industry estimates, Accel has consistently delivered the strongest returns of any venture fund in India, often by a significant margin. One notable success is food delivery startup Swiggy. Anand Daniel led the first institutional investment of $2 million. Swiggy went. public in November It was the world's largest tech IPO of 2024 with a valuation of $11.3 billion.
The company's discipline stems from an analysis of India's startup opportunity. Accel estimates that roughly 300 high-quality companies emerge each year from pre-seed to Series A stage. Among them, It aims to return around 40 to 60-70 on total investment per fund cycle.
“We want to raise the right amount of early-stage funding to generate good returns,” Daniels said, noting that each additional dollar beyond that point makes it challenging to deliver solid target returns.
The approach comes at a time when other Silicon Valley venture firms are reassessing their India strategies. Sequoia and Matrix are both recent. separate from their India.. But Accel has doubled down on its hybrid model. “Whether you build a completely independent fund or have a common name, everything is decided centrally,” Kirani said. “What we have at Accel is the perfect combination.”
One of the areas where this strategy stands out is when the Accel team in India can pull in global growth funding to write a bigger check on an Indian startup, Daniel said.
The company's commitment to India spans over 15 years, during which it has seen market entries and exits from global venture firms. India has emerged as the latest significant growth market for Internet companies, but companies such as Battery Ventures and Omidyar; I was distracted..
Returns have always been a concern for the industry. “Return on capital in India is historically low,” said Scott Shleifer, partner at Tiger Global. told the founders. In 2023, The fortunes of the market are changing. A record 13 Indian companies went public last year. We are preparing to list 25 more.TechCrunch previously reported About 10 Accel-backed startups could be listed this year.
As India's digital infrastructure matures, questions arise about the next wave of opportunities. Both partners note that entrepreneurs and markets are maturing, but Indian startups have not traditionally excelled in certain areas, such as cyber security. As AI makes software development more efficient around the world, there are questions about whether India's traditional advantage in providing low-cost services will continue.
Accel's latest funding reflects these evolving opportunities. Flipkart The company, which has backed Myntra and Freshworks, is betting on urban India's rich tech startups and software companies building proprietary products on AI platforms.
There is that too. The focus on the term “Bharat” intensified. – Small towns and villages believed to harbor another wave of unicorns. “There is a perception that rural areas are poor. But if you look at what the top 20% to 30% are spending there, it's pretty significant. It's estimated north of $250 billion,” Daniels said, adding that the top quintile in these markets often outnumbers half the urban population.
Startups that have made inroads in urban India won't end up replicating their success in Bharat, the partners cautioned. If consumer behavior remains the same in rural India, Kirani says the incumbents are doing well. “But if they value things differently, you might want to handle them a little more.”