Sequoia Capital secures $1.35 billion to push start-ups in South-East Asia

Indian outlet of Sequoia Capital, an American venture capital firm, announced on Monday that it has secured $1.35 billion from Limited Partners (LPs) for two new funds, as per media reports.

The announcement comes as the venture firm eyes the second largest internet market in the world and South-East Asia.

According to Shailendra Singh, managing director at Sequoia Capital India, the two new funds, a $525 million venture fund and an $825 million growth fund, will help the VC firm push the start-up ecosystem in South-East Asia to the forefront.

“A fund raise represents a massive responsibility to deliver attractive returns to Sequoia’s Limited Partners, the majority of which are non-profits, foundations, and charities. We do this by partnering with outstanding founders who are building category-defining companies,” he said as quoted in the TechCrunch report.

Sequoia Capital India made over 50 investments in 2019 after roping in former Google India head Rajan Anandan and former Uber India head Amit Jain last year.

The firm, which began investing in India 14 years ago, closed its last fund, of $695 million, for India and South-East Asia in 2018. That was its sixth fund for the region.

Sequoia Capital helped many high profile start-ups in India to flourish. This includes ed-tech giant Byju’s, which is now valued at $10.5 billion, ride-hailing giant GoJek, e-commerce platform Tokopedia, Singapore e-commerce startup Zilingo, and fintech startup PineLabs, online learning startup Unacademy, fintech firm RazorPay and Khatabook, which offers bookkeeping services to merchants, Tech Crunch reported.

Last year, Sequoia Capital India sold most of its stake in budget hotel startup Oyo. The VC firm has so far backed 11 unicorns in India and South-East Asia.

The investment announcement ushered in a time when the world economy is crumbling due to the coronavirus pandemic.

“Due to frequent cycles of intense competition, start-ups in our region have struggled to grow rapidly with good unit economics, often posting very high losses for the scale of business. This has prevented very large profitable technology businesses in our region from emerging. To add to these challenges, start-ups in India do not have the benefit of a regulatory framework that allows listing on foreign exchanges like Nasdaq. In this market context, most start-ups have chosen to remain private, and raising capital has become a proxy for success,” said Sequoia’s Singh as cited in the Tech Crunch report.

“We believe there is an opportunity to choose a different path. Our ecosystem has arrived at a fork in the road,” he added.

The news comes as a relief for Indian start-ups that are currently facing impediments in raising capital from Chinese investors.

In 2019, Sequoia Capital India initiated an accelerator programme called Surge for early-stage start-ups. Since then about 50 start-ups have participated in Surge, which some analysts told TechCrunch, has reduced Y Combinator’s appeal in the region.

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