Elevation Capital (previously Saif Partners), an early-stage investor that has backed companies including Swiggy, Paytm, Urban Company, and Meesho, has closed its ninth India-focused fund at $670 million, its largest-ever corpus.
This comes as global technology investments and values are being harmed by signs of a funding slowdown and overall macro challenges. It also comes after the venture capital firm raised $400 million in October 2020 as part of its India-focused Fund VII, which coincided with the commencement of a never-before-seen boom time for Indian entrepreneurs as record-breaking funding poured into the nation.
In contrast to the last fund, which was rapidly distributed among more than 30 firms, Elevation said it will try to deploy the new funds over a three-year time frame as the pace of fundraising begins to slow.
According to sources familiar with the matter, Accel, one of India’s most prominent venture funds, announced the close of its seventh fund at $650 million last month, while Sequoia Capital, based in Silicon Valley, is on track to raise $2.8 billion for its latest India and Southeast Asia fund, signaling the ever-increasing pool of capital being committed to addressing the India opportunity.
Indeed, younger venture capital firms such as Stellaris Venture Capital, A91 Partners, and Sixth Sense Ventures all doubled or treble their fund sizes in 2021.
Elevation, which has kept its fund around $300-400 million despite peers raising considerably larger funds in recent years, said it had reached a tipping point. While most of the larger VC funds have moved into Southeast Asia, Elevation will continue to invest exclusively in India.
Sectors like Software-as-a-Service (SaaS), web3, and crypto, according to Arora, will be the new focal areas, and an expanded corpus will allow them to take bets.
Elevation closed roughly 30 deals last year and will continue to write checks in the range of $2 million to $5 million during the early phases of a startup’s lifespan, with capital commitments up to $25 million.
Since the beginning of the year, ET has been reporting on early signs of consolidation and a slowdown in dealmaking.
According to Mridul Arora, partner at Elevation Capital, seed and Series A stage funding is unaffected.
According to Preqin, a UK-based investment data platform, Indian entrepreneurs collected $36 billion in risk capital in 2021, making it a watershed year for fundraising, even as a slew of IT firms went public on Indian exchanges.
One97 Communication, the parent company of digital payments platform Paytm, in which Elevation was the first institutional investor, was one of the first to float on the stock exchange, however, its stock has been declining since November.
Paytm management has been focusing on making the business stronger on a monthly and quarterly basis, according to Mukul Arora.