Accel raises $550 million sixth India fund (2024)

BENGALURU: Accel India, which has backed some of the country's leading technology startups like Flipkart, Freshworks, and Swiggy, has raised about $550 million for its sixth India fund, taking its assets under management to $1.5 billion. This makes Accel VI, among the largest corpus for an India-focussed venture capital firm which last raised $450 million three years ago.

One of the most prominent VC firms in Silicon Valley, Accel said it will continue to scout for early-stage deals across consumer internet, enterprise, financial services, healthcare, and Software as a Services (SaaS) startups. The Bengaluru-based Accel India’s $450 million fund saw 70% of its investments in the range of $2 million or less.

“Our strategy across all our six funds has remained the same - to back early-stage companies from being as small as a two-member team. However, what has changed is that we are progressively allocating more money for our winning companies,” said Shekhar Kirani, partner at Accel India

'..The increase fund size also gives us increased flexibility to even do larger cheques in an off case," added Subrata Mitra, partner at Accel India.

For what was its largest exit ever Flipkart, which was acquired by Walmart last for $16 billion, Accel had invested a total of $124 million while Freshworks, a SaaS customer engagement solutions company, presently valued at $3 billion the fund pumped $142 million, in all.

“What took seven years for Flipkart, Swiggy did it in four years, and Bounce in two years... So newer companies are taking advantage of trained consumer behavior as well as more sophisticated infrastructure, and technology landscape” said Kirani to ET.

Of its 120 active portfolio companies, the venture fund has 44 of firms valued at above $100 million. Accel’s fund deployment cycle is typically between 3-4 years, with close to 80% of deals being less than $2 million. It plans to invest in around 60 companies from the new fund.

“We are not passive investors, and our team has significant insights and frameworks to help younger companies throughout their growth,” Accel said in a statement. The fund has an active operating team to support portfolio in areas including product and scale thinking, brand and digital marketing, organizational scaling and culture, and financial metrics.

Accel's fundraising comes on the back of a perceptible change in investor sentiment towards loss-making internet startups triggered by SoftBank-backed office-sharing startup WeWork’s IPO debacle and Uber’s underperformance after it tapped the public market.

The depleting value of some of these companies which had been the flag bearers of the startup technology ecosystem globally has raised an alarm with even the largest private marker backers like endowment funds and family offices. According to Prashanth Prakash, Partner at Accel, while Indian markets are not totally in sync with trends in Silicon Valley, fund backers or limited partners (LPs) would like to see more exits from India. “LPs would like to see a consistent IPO market of venture-backed companies,” he said, while Kirani added that Accel will continue to opportunistically seek exit opportunities across its portfolio.

Earlier this year, the firm elevated three of its executives Abhinav Chaturvedi, Prayank Swaroop, and Barath Shankar Subramanian, from being principals to partners, taking the total top deck count to nine, and making Accel India partnership one of the largest in the venture capital industry.

While India continues to be a core focus for the sixth fund, Kirani added that the fund will opportunistically make a few bets in South East Asia and the Middle East.

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