The State Of Venture Investments In India: Insights From Lightspeed


Over 150 investors, including Singapore’s sovereign fund Temasek and Malaysia’s Khazanah, gathered at Mumbai’s five-star Trident Oberoi hotel on a recent Friday for venture firm Lightspeed India Partners’ “Lift Off” summit. The two-day event aims to spark partnerships by enabling “in a short window, many views, ideas and investments to be shared between nC2 connections (every permutation and combination),” described Karthik Reddy, co-founder of Blume Ventures.

Key Takeaway

India’s startup funding is rebounding, but challenges persist, including concerns about over-raised VC funds and the need for patient capital for late-stage startups.

India’s Rebound in Startup Funding

The upbeat atmosphere this year reflected India’s rebound in startup funding over the past three to four months. But the lavish setting couldn’t mask pressing questions still facing the industry. Byju’s, once India’s most valuable startup at $22 billion valuation, is seeking new capital through a rights issue that would slash its valuation by a whopping 99%. Paytm, once the poster child of India’s startup dreams that went public at a $20 billion valuation in 2021, has seen its market cap shrivel below $3 billion amid the tech market carnage and regulatory upset.

On VC Fund Size

“Sitting here in early 2024, with the benefit of observing 2023 investment activity levels as well as the pace of start-up creation, I think the answer is yes,” responded Lightspeed partner Bejul Somaia when asked whether Indian VC firms have over-raised, amassing more funds than they can responsibly deploy.

India in the Global AI Race

With AI progress surging in Western hubs, India is lagging in foundational research as very few of its startups attempt to build large language models. Lightspeed sees parallels to the firm’s early investment in Indian Energy Exchange – building a power trading platform whose analog didn’t exist in Western markets.

The Patient Capital

A concern held by many investors in India is that several late-stage startups continue pushing for up-rounds, exhausting their runways before accepting post-downturn realities. India has also attracted growing sovereign fund interest over the past three years at a scale it never before, he said, adding he was optimistic that they will invest in many late-stage startups.

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