Bengaluru: Venture capital (VC) firm Accel Partners, which over the years has backed high-profile technology start-ups, including Facebook Inc. and Flipkart, has raised $450 million for its fifth India fund, indicating that investors are still enthusiastic about Indian start-ups.

The latest fund is considerably larger than the $325 million the VC firm raised in its previous fund and will bring Accel Partners’s assets under management (AUM) in India to more than $1 billion.

Accel will begin to deploy the latest fund in early 2017, the firm said in a statement.

Accel, which has enjoyed success in India over the past 12 years with early bets on start-ups such as Flipkart, Myntra and Mu Sigma Inc., said the fifth fund will be deployed in five broad areas: consumer internet, enterprise software, financial technology, business-to-business and healthcare.

“We have been actively investing in India since 2005, and our LPs (limited partners) continue to be supportive of our investment strategy. Over the last few years, we have realized that several categories are going online faster than ever before (for example, e-commerce, movie tickets, cab bookings, groceries, food deliveries, local services and marketplaces). Categories that used to take several years to scale (five years), are now doing it in significantly less time (2-3 years)," said Shekhar Kirani, one of the six partners at Accel Partners India.

Accel India’s four previous funds raised a total of $560 million. The VC firm started out in India in 2008, buying the operations of Erasmic Venture Fund. Erasmic executives Subrata Mitra, Prashanth Prakash and Mahendran Balachandran joined Accel and are still partners at the firm, which later added three other partners—Kirani, Anand Daniel and Dinesh Katiyar.

Accel has consistently adopted a strategy of investing in seed-stage or early-stage start-ups with few bets on mature tech start-ups.

Experts say it’s relatively easier for the likes of Accel and Sequoia Capital, which are based in the US, to raise new funds compared with so-called home-grown VCs such as Kalaari Capital, Nexus Venture Partners and Helion Venture Partners. Yet, Accel Partners has actually returned money to its LPs, which is a rarity among Indian VCs that have largely struggled for exits.

ALSO READ | VC firms seek more time to return money to investors

Accel’s first two funds totalling just $70 million uncovered gems such as Mu Sigma, Myntra and Flipkart; it has already returned its first fund and is on course to give handsome returns to its LPs on the second fund. It was one of the first VCs to identify and invest in e-commerce and Software-as-a-Service (SaaS) companies.

However, the success of Accel’s subsequent funds is far from clear. What’s also noteworthy is that Accel finished making new investments from its fourth fund in just two years, compared with the average time span of three to four years for a fund. Typically, a large part of a fund is set aside for new investments while the rest is reserved for backing those portfolio start-ups that turn out to be relatively successful.

And as Accel’s funds become larger, it may become correspondingly more challenging for it to keep LPs happy. Its last fund of $325 million, for instance, also looks like the riskiest. Accel said the increase in fund size will help it to cash in on early bets by putting more money in these companies in follow-on rounds.

For the fifth fund, Accel said it will continue with its strategy of backing mostly early-stage ventures, with the rest reserved for late-stage bets and follow-on investments in existing companies.

Accel’s fund raise comes amid a relatively tough time for Indian start-ups. VCs have reduced investments this year compared with the levels of the two preceding years but, in general, many new and promising companies are still getting funded. That’s because most VCs raised billions of dollars in new funds last year. In the absence of exits, the next fund raise for many VCs may be much tougher than in previous years.