Bengaluru: Venture capital firm Accel has raised $550 million for its ninth India-focused early-stage fund, just 18 months after closing a $650 million fund. The Palo Alto-headquartered firm has now raised $1.2 billion for India during this period.The India fund is part of a $3.5 billion global fundraise across four new vehicles, including a separate $1.3 billion growth fund for later-stage investments.The new India fund will largely stick to Accel’s strategy of investing early, often as a startup’s first institutional investor. Partner Anand Daniel said the firm expects to back 15-30 companies a year.Partner Abhinav Chaturvedi said Accel typically invests when startups have post-money valuations of $10 million-$20 million, targeting businesses that can eventually reach multi-billion-dollar market capitalisations.“And ideally come into these companies as early as we can,” Chaturvedi told TOI in a joint interview with Daniel. “The typical post-money valuation for our companies would be between $10 million and $20 million… And we want these companies to get to at least a few billion dollars in market cap when they list.”More than half of the earlier $650 million fund remains undeployed.“We have to be disciplined in deploying capital,” Chaturvedi said. “We still have a lot of the previous $650 million fund left to be deployed.”The fresh fundraise, he said, was aimed at ensuring capital was available when investment opportunities emerged.AI will be a major focus of the new fund across consumer, financial services and manufacturing. Accel will also continue investing in fintech and manufacturing, while advanced manufacturing and deeptech are emerging focus areas.The firm is becoming more selective in consumer investments, particularly brands and consumer products, where it sees limited upside.“We do fewer brands and consumer products where we have seen there is a ceiling for the outcomes,” Chaturvedi said.However, it will continue backing potential outliers such as jewellery retailer BlueStone, he added.Accel is also investing across different segments of Indian consumption. Daniel said FirstClub and Swish target the top 10-20 million households, while CityMall and ApnaMart cater to more value-conscious consumers.On premium consumption, Chaturvedi said Accel had not seen a significant pullback in spending.“There is a large enough market for that, and they are willing to pay for it. We don’t see any resistance,” he said.AI is also changing startup economics, with Chaturvedi saying “a lot can be accomplished with a smaller number of people”. Daniel said this could reduce the venture capital required to scale companies and lower founder dilution.However, Chaturvedi said the impact on Accel’s own cheque sizes had so far been “marginal and nothing material”.Accel is also seeing more of its portfolio companies reach public markets. Daniel said five have listed in India and another four are in the pipeline, adding that the country’s IPO market has “finally come of age”.Chaturvedi said this gives investors an important route to liquidity at a time when exits remain difficult globally.
