Matrix Partners expands India-focused fund to $525M amid funding winter

Representative image

Matrix Partners India, a subsidiary of the US-based venture capital firm Matrix Partners, has increased the size of its fourth India-focused fund to $525 million, despite the challenging funding environment in the country.

The VC firm, known for backing unicorns like Ola and Razorpay, initially aimed to raise $450 million and had applied to the US Securities and Exchange Commission (SEC) for this purpose in June. However, an amendment was submitted in April to expand the fund's size, as indicated by SEC filings.

The filings showed that the VC has already raised $517.93 million. Matrix Partners has also applied for another fund-Matrix Partners India IV A, and is looking to raise about $14.75 million through it.

Moneycontrol had previously reported in May 2021 that Matrix was seeking to raise a $400 million India-focused fund, which would be its largest ever. To date, Matrix Partners India has invested in approximately 150 companies in the country, making it one of the most active early-stage investors alongside Sequoia Capital, YCombinator, and other domestic VC firms. The firm has supported eight unicorns, including OneCard, Dealshare, OfBusiness, and VerSe Innovation (the parent company of Dailyhunt).

Matrix Partners India's decision to expand the fund size comes at a challenging time for Indian startups, as they face one of the most severe funding downturns in recent years due to deteriorating macroeconomic conditions.

Despite being a highly active startup investor, Matrix reduced its investments in 2022 by half compared to the previous year, participating in 22 funding rounds, according to data from Tracxn Technologies. As of this year, the VC has not yet participated in any deals.

It is worth noting that, similar to Matrix, most VC investors have scaled back their investments in the past 15 months, even though they have raised or planned to raise significant funds. For example, Sequoia Capital India raised $2.85 billion in June last year to focus on investments in India and Southeast Asia but has only participated in 11 deals in the first five months of 2023, compared to nearly 30 in the same period in 2022. Nexus Venture Partners, Accel, and Elevation Capital have also closed their largest-ever India-focused funds.