Accel has kept its India funding size at $650 million for the eighth vehicle, even as other venture firms in the region race to raise a bigger pool of capital. The company has a lot of opportunity to raise “multi-billion dollars,” said Shekhar Kirani, a partner at Accel, in an interview with TechCrunch. But unlike its peers who have raised funds, Accel remains steadfast based on a calculated analysis of India’s venture opportunities. Peak XV has raised $2.5 billion in its latest set of funding for the region, while Lightspeed has nearly doubled its Indian funding to $500 million in recent years. Stellaris, which launched in 2017 with $90 million in funding, recently announced its third round of funding at $300 million. “We have done a lot of historical studies in the US and China. As funds exceed $600-$650 million, historically, even in established markets, building high-quality returns is extremely hard,” said Kirani. The strategy mirrors US firm Benchmark, which has maintained a relatively small fund size for decades while generating huge profits. According to industry estimates, Accel has consistently delivered the strongest returns of any venture fund in India, often by significant margins. One notable success was food delivery startup Swiggy, where Anand Daniel led the first institutional investment worth $2 million. Swiggy went public in November as the largest global tech IPO of 2024, valued at $11.3 billion. The company’s discipline comes from an analysis of India’s startup opportunities. Accel estimates that approximately 300 high-quality companies emerge each year in the pre-seed stage for the Series A stage. Of these, it aims to generate around 40 to 60-70 of the total investment per funding cycle. “We want to raise early-stage funding at the right size to generate good returns,” Daniel said, noting that every additional dollar raised beyond the point of making it challenging to return the company’s target. Accel partners in India, Anand Daniel (Left) and Shekhar Kirani. Image: Accel The approach comes at a time when other Silicon Valley venture firms are reevaluating their India strategy. Sequoia and Matrix have recently pulled out of their Indian affiliates. But Accel has doubled down on the hybrid model. “You build an independent fund, or you just have a common name or everything is decided centrally,” Kirani said. “What we have at Accel is the perfect combination.” One place where this strategy is evident is when the Accel team in India can attract global growth funds to write larger checks to Indian startups, said Daniel. The company’s commitment to India spans more than 15 years, during which time the market has seen the entry and exit of global venture firms. While India has emerged as one of the last significant growth markets for internet companies, companies like Battery Ventures and Omidyar have shifted their focus. Returns have been an ongoing concern for the industry. “The return of capital in India has historically sucked,” Tiger Global partner Scott Shleifer told the founders in 2023. The fate of the market has changed. A record 13 Indian startups went public last year, with another 25 preparing to list, TechCrunch previously reported. Up to 10 Accel-backed startups can be registered this year. As India’s digital infrastructure matures, questions arise about the next wave of opportunities. Indian startups have not traditionally excelled in certain domains – like cybersecurity – although the two partners noted that entrepreneurs and the market have matured. There are also questions about whether India’s traditional advantage of offering similar services at a lower cost will remain as AI makes software development more efficient globally. Accel’s latest fund reflects this growing opportunity. The company, the backer of Flipkart, Myntra and Freshworks, is betting on wealth technology startups in urban India and software companies that create specialized products on AI platforms. It has also increased the focus on so-called “Bharat” – the small towns and villages believed to be the next wave of unicorns. “There is a perception that rural means poor. But if you look at what the top 20% to 30% spend there, it is quite significant. We think it is north of $250 billion,” said Daniel, adding that the top quintile of the market often exceeds half of the city’s population. Startups that have made inroads in urban India may not replicate their success in Bharat, partners warn. If consumer behavior remains the same in rural India, incumbents stand to do the same, said Kirani. “But if they value things differently, you might want to address them more.”
