A week after raising its largest-ever venture capital (VC) fund of $2.85 billion for Indian and Southeast Asian startups, Sequoia Capital India has extended the seed-level funding range for its investments through Surge, its startup accelerator programme, to as much as $3 million, the VC firm said in a blog post on June 23.
The VC firm, through Surge, currently invests in the range of $1 million to $2 million and said that the decision to extend it to $3 million was driven by the ‘extraordinary founder response and feedback’ it received over the first six cohorts.
“This (extending range to $3 million) will allow us to make Surge relevant for a far larger set of founders, including those who are just starting up or those who have already raised a seed,” Sequoia Capital India said in the blog post.
“Raising the ceiling gives early-stage founders the runway and time they need to find product-market fit and build a strong team before raising a Series A. This is critical in any market cycle, and even more so at a time when investors are being more cautious and follow-on rounds may take longer to close,” Sequoia Capital India added.
Sequoia Capital India’s move of extending its Seed funding ceiling suggests a rising appetite for early-stage startups in India. It also comes at a time when many global VC firms, including Sequoia, have raised their largest-ever funds for Indian startups and with funding at later stages slowing down more than in early stages, competition among VCs will be fierce at early-stage rounds, given that they have a lot of dry powder.
The VC firm said that it is also doing away with its floor price of a minimum $1 million to help founders raise smaller rounds than $1 million at a time when the overall funding market is slowing down.
“We’ve also met many pre-launch founders over the last few years who are still thinking through their product and want a smaller round to manage dilution - which also becomes even more critical in a down-market. So we’re also doing away with the $1 million floor,” Sequoia Capital India said.
Sequoia Capital India said that all applicants from its eighth cohort onwards, including the ones raising smaller rounds of as little as $300,000 and the ones raising larger rounds of as much as $3 million, could be a part of Surge. The VC firm claimed that over 20 percent of Surge startups across its first six cohorts, were at the pre-launch stage when Sequoia Capital India partnered with them.
Across its first six cohorts, Surge has partnered with 246 founders from 112 startups, Sequoia Capital India said. Out of the 112 startups, 64 were from India, while 45 were from Southeast Asia.
Sequoia Capital India said Surge startups have collectively raised over $1.5 billion in follow-on rounds. The VC firm, through Surge, has invested in sectors such as edtech, fintech, agritech, healthtech, logistics and consumer brands, it said. Over 40 percent of Surge startups are software companies providing applications, vertical SaaS (software-as-a-service), development tools and cybersecurity, the VC said.
Sequoia Capital India, which had launched its sixth cohort in January this year, said that it will launch the seventh edition of Surge in August this year.
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