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Lightbox Ventures partner Sandeep Murthy. Photo: Aniruddha Chowdhury/Mint
Lightbox Ventures partner Sandeep Murthy. Photo: Aniruddha Chowdhury/Mint

Lightbox raises 3rd India fund, aims to close at $200 million

Lightbox Ventures will back 9-10 early-stage startups with its third India fund, says partner Sandeep Murthy

Bengaluru: Venture capital (VC) firm Lightbox Ventures LLC, which has so far raised two India-focused funds and backed startups such as Furlenco, Faasos, Embibe and Droom, has raised $178 million for its third fund, which it hopes to close at $200 million by the end of the year.

The new fund is Lightbox’s largest till date and is reflective of the renewed optimism towards India’s booming startup ecosytem—triggered partly by Walmart’s $16 billion acquisition of Indian e-commerce firm Flipkart. Since then, large global and domestic investors led by the likes of SoftBank Group Corp., Tencent Holdings Ltd and Alibaba Group Holding Ltd have doubled down on India and written large cheques to a bunch of growing Internet businesses.

According to a regulatory filing with the US Securities and Exchange Commission (SEC) today, Lightbox plans to raise another $22 million and cap the fund at $200 million.

Lightbox Ventures will largely adopt its tried-and-tested approach towards investing from its latest fund and look to back 9-10 early-stage startups, said partner Sandeep Murthy in an interview with Mint earlier today. “We’ve largely stuck with the same ideas and the approach that we used in our previous funds: the fact that less is more. We believe in getting deeper into a handful of strong businesses, rather than invest in a broad number of companies," said Murthy.

“The reason why we’ve raised more capital this time is largely because we really want to help startups build big businesses and make it easier for them to scale up. We want to get deeper into a handful of deals and ensure that there is enough capital available to keep supporting them at different stages," he added.

Mint had in June 2017 reported that Lightbox would raise a new fund in 2018, after completing the last few investments from its second fund.

Lightbox closed its second India fund at 600 crore in October 2014. In late 2016, Lightbox raised an add-on fund of $54 million to invest in its existing portfolio startups. Lightbox’s first ever fund in India—called Lightbox Ventures I—was used to buy out six portfolio companies that Murthy had invested in when he was working with Kleiner Perkins (formerly Kleiner Perkins Caufield and Byers) and Sherpalo Ventures.

“Conventional wisdom in the venture capital world suggests that you need to invest in many startups and a considerable number of those ventures will fail. We believe that we don’t have to fail often. What we want to do is just back a handful of companies with sound businesses—like we’ve done in the past," said Murthy.

Since the beginning of this year, a number of large and mid-sized venture capital firms, including Sequoia Capital India, Lightspeed Ventures, Nexus Venture Partners and Matrix Partners have raised new funds, indicating that the funding environment has witnessed a massive upswing since the beginning of the year, after funding dried up during 2016-17.

In August, Sequoia Capital closed its fifth India-focused fund at $695 million.

Startups have been raising multiple rounds of capital in quick succession at increasingly higher valuations, so much so that this year is resembling 2014—a year when startup funding boomed in India.

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