Accel, one of the most prolific investment firms in the world, has raised a record $650 million (around Rs 5,500 crore) for its eighth India fund, regulatory filings with the US Securities and Exchange Commission (SEC) showed.
Additional capital will help the investor deepen its India focus, especially at a time when it is looking to back non-conventional companies building from non-metro cities.
The size of Accel’s eighth fund is the same as its seventh fund where it raised $650 million in March 2022. The investor has closed its latest fund a few weeks after two of its portfolio companies, Swiggy and Blackbuck (Zinka Logistics), went public. In fact, Swiggy’s $1.35 billion IPO was one of the largest for new-age companies since Paytm’s $2.4 billion public market debut in 2021.
Accel earned a whopping 35X return on its $20 million investment on Swiggy. From 2015 to 2017, Accel participated in six consecutive rounds of funding, backing Swiggy as it doubled and quadrupled in valuation each time.
In all, Accel deployed around 6 percent of its $325 million fourth fund (Fund IV) into Swiggy. The Swiggy play is emblematic of Accel’s wider approach to early-stage investing. Accel’s IV fund, which invested in Swiggy, was a $325 million fund launched in 2015 and Swiggy alone returned over 1.5x the total fund.
Accel’s first cheque into Swiggy was when the company’s valuation was less than $6 million. Nine years since, just the Swiggy bet, if considered alone, has delivered nearly 200x returns for Accel, putting it in the rare league of early Flipkart returns.
Accel was the first VC firm to back Flipkart during its early days when the company was valued at a mere $4 million. The e-commerce company was sold to US retail major Walmart for $16 billion in 2018.
While most investors had sold their shares in Flipkart, Accel, unlike most other investors, had retained a small 1.1 percent stake even after the acquisition, only to fully exit the company in 2023. In entirety, Accel generated cumulative returns of around $1.5-2 billion, Moneycontrol had reported earlier, generating a whopping 25-30X return on its total investment of about $60-80 million over the years.
Apart from Flipkart and Swiggy, the investor has also backed other firms such as Urban Company, Acko Insurance, BlueStone and several others that are preparing to go public.
Evolving landscape
Accel has closed its latest fund at a time when venture capital firms are already sitting on billions of dollars in dry powder, or undeployed capital, and plenty of other action in the space.
Accel's peer A91 Partners is also in the process of raising around $700 million in its largest fund yet as investors double down on India, the world's third-largest startup ecosystem. While Accel and A91 Partners are raising new funds, others such as Peak XV Partners has trimmed the size of its fund.
In an unusual move, venture capital fund Peak XV Partners reduced the size of its $2.85 billion fund by 16 percent or by $465 million, as it looks to deploy capital more judiciously and return uninvested monies to its sponsors or limited partners (LPs), amid a buoyant public market and its rub-off effect on private market valuations, Moneycontrol had reported earlier.
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