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.
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.
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).
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.
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.
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.
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.