Lightspeed India is a global multi-stage venture capital fund active in India and Southeast Asia since 2008. Investing $1.5 billion in the Indian market till date, it has established four funds along the way.

With 11 unicorns in its portfolio, the VC has played a significant role in the success stories of several prominent start-ups such as Oyo, Sharechat, Darwinbox, Byjus, and more.

Dev Khare, a partner at Lightspeed, shares his reasons for an optimistic outlook on the Indian market, particularly due to the ongoing technological advancements, and more.

Q

Your take on the perceived funding winter in the start-up sector?

The funding ecosystem is healthy for the early, seed, and series A stages, contrary to some narratives out there. However, it is growth financing that has taken a real hit. Capital has not dried up, but it has become tempered and focused on high-quality assets. Growth deals are happening, but they’re more realistic and reasonable, and it’s a healthy environment.

Q

What does Lightspeed’s current portfolio look like?

We have more than 90 portfolio companies in India and Southeast Asia. We enter primarily at the seed and series A stages. Over the last few years, we’ve added growth practices in India. Our most recent growth-stage investments include Razorpay, Yubi, Acko (in India), and Aspire (in Southeast Asia).

Q

How many funds have you raised and which are the sectors of interest?

We are currently deploying the fourth fund, through which we raised $500 million in 2022. Our key sectors of interest include consumer, enterprise/ SaaS [software-as-a-service], SMB [small and medium-sized business], marketplace, and fintech. In terms of early-stage sectors, anything related to content such as education and entertainment (text, audio, and video); climate and space tech; and cross-border, including commerce and consumer companies. With respect to growth, the market has gone to more predictable business models — SaaS and certain types of fintech.

Q

What is the average cheque size deployed?

We put anywhere from half a million dollars to 100 million dollars into a company, depending on the stage and our conviction in the company. The average cheque size went up a little during the pandemic because everything was a bit overheated; it’s come down, but not dramatically. Globally, Lightspeed raised over $7 billion last year in capital, $500 million of which was for Lightspeed India partners, and we’ve been deploying it.

Q

Which is your preferred exit route?

Our forms of exit, traditionally, in more mature economies have been IPOs [public offering] or M&A [mergers and acquisitions]. In India, both routes are at an early stage. There are a fair number of secondary sales happening in the country.

Q

Your take on start-ups focusing on profitability over growth?

We want to invest in companies with exceptional founders going after large markets, which happens in an upcycle or a downcycle, whether growth investors are focused on profitability or growth. In fact, for founders to set up and build a product that’s 10x better than the next thing out there, it takes time and investment. We don’t oscillate between wanting profitability or growth at different times.