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Business News/ News / India/  Lightspeed Ventures to ramp up investments in climate change and AI

Lightspeed Ventures to ramp up investments in climate change and AI

Rahul Taneja, partner at Lightspeed India, said the VC firm would continue to invest in emerging themes in addition to the core streams of enterprise SaaS, fintech, consumer and commerce.

Rahul, Taneja, Lightspeed Venture Partners. Photo: LightspeedPremium
Rahul, Taneja, Lightspeed Venture Partners. Photo: Lightspeed

Bengaluru: Lightspeed Venture Partners, which has backed prominent Indian startups such as Sharechat, Udaan and Razorpay, will invest in emerging areas such as climate change and artificial intelligence, and companies with cross-border operations, a top executive at the firm told Mint in an interview. "We will continue to invest in emerging themes in addition to the core streams of enterprise SaaS, fintech, consumer and commerce," said Rahul Taneja, partner at Lightspeed India.

The venture capital (VC) firm has invested in companies such as AI-based Sarvam, Marqo AI, and Exponent Energy, which provides fast charging networks for electric vehicles. In the cross-border segment, Lightspeed has invested in startups such as Pocket FM, which built its product in India but receives a significant portion of its revenue from the US. Other companies it has funded in the cross-border commerce and payments segment include Youtrip, Zyod, Mstack, Zolve and Globalfair.

The VC firm, which is currently investing from its $500-million fourth fund, has conducted about 18 deals in the past year and deployed over $250 million across stages in India, including follow-up investments in 8-10 existing portfolio companies.

Taneja explained Lightspeed's India journey, which began in 2007, by splitting it into three phases. In the first phase, between 2007 and 2015, the VC firm invested in India from its global fund. With successful bets in companies such as Indian Energy Exchange, Tutorvista and Oyo, Lightspeed raised $135 million for its India-specific fund in 2015. Over the next five years it raised three more funds, valued at $175 million, $275 million and $500 million. On its plans for another fund, Taneja said, "We are perhaps 18 months away from evaluating the next fund raise".

In the second phase, between 2015 and 2020, "enterprise SaaS started becoming prominent and we invested in companies such as Darwinbox, Acceldata and Yellow.AI," he said.

In the third phase, from 2020 onwards, Taneja said Lightspeed has made a number of changes to the way it approaches investments. Firstly, the VC firm became a multi-stage fund. While Lightspeed was initially focused on early-stage startups, it now has the firepower to invest in successive growth stages with cheque sizes ranging from $1 million to $100 million, Taneja said.

Second, it has ventured into more geographies and extended its India fund to also include Southeast Asia. "As a part of the same ($500 million) fund, we invest in Southeast Asia and have now made significant investments across Singapore, Indonesia, Australia and Hong Kong," Taneja said. Third, Lightspeed has built specialist teams to guide young startups and provide them with expertise in talent and leadership, corporate development, M&A strategies, marketing and finance.

Taneja, who joined the VC firm in 2020, has held senior positions in several consumer-facing companies such as Procter & Gamble, PepsiCo, Snapdeal and Jabong. India's evolving consumption patterns have been marked by two distinct trends over the years – premiumisation and individualisation, he said.

People are willing to spend more to buy everything from atta to clothes, which gives companies more room to deliver differentiated products and services, Taneja said. He added that the rise in nuclear families has also led to greater individual consumption, which boosts overall buying.

Consumer-facing startups such as Nykaa and Mamaearth have also been making strides in the omnichannel (online and offline) category. While navigating customer reach can be challenging for startups, Taneja said every company needs to be specific at the start before expanding to adjacent markets that offer more room to grow.

While the company has clocked decent returns from the previous funds, Taneja explained that rising digitisation opportunities and a large amount of high-quality technical talent in India makes it attractive to investors.

India’s startups ecosystem has been experiencing plenty of churn as high interest rates, uncertain macroeconomic conditions and geopolitical tensions have dampened investor sentiment.

Asked about this, Taneja said the noise around the “funding winter" was highly exaggerated and that there was "enough and more capital" for the right kind of businesses and founders. "We believe it's a great time to be investing because founders today have much higher conviction in their ideas, unlike in 2021 when, thanks to cheap capital, getting an idea financed seemed easier than ever before. Additionally, valuation expectations have become a lot more rational," he said.

Founded in 2000, Lightspeed has a presence in regions including Europe, Southeast Asia, the United States, Israel and China.

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Published: 11 Mar 2024, 10:54 AM IST
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