In a significant move that underscores continued investor confidence in India’s startup ecosystem, venture capital powerhouse Accel has successfully raised $650 million for its eighth India fund. The fund, which attracted participation from 131 investors, mirrors the size of its seventh fund raised in 2022, demonstrating sustained institutional interest in Indian technology ventures despite global market uncertainties.
The new fund’s announcement comes at a crucial time for India’s startup landscape, as the country maintains its position as the world’s third-largest recipient of startup funding, following the United States and the United Kingdom. According to Tracxn’s ‘Geo Annual Report – India Tech – 2024’, while overall funding has shown signs of recovery with a 6% year-on-year increase from 2023, it remains 56% below the peak levels seen in 2022.
Accel’s latest fund represents a strategic commitment to the Indian market, where the firm has established a strong track record since opening its India office in 2008. The venture capital firm, which maintains offices in Palo Alto, San Francisco, London, and India, has built an impressive portfolio of over 300 companies globally, including tech giants such as Facebook, Slack, and Dropbox.
The firm’s investment acumen has been particularly evident in its recent exits, notably through Swiggy’s IPO, where Accel demonstrated remarkable returns. The firm tendered 10.5 million shares in the food delivery giant’s offer for sale (OFS), achieving a staggering 3,391% return based on its initial acquisition cost of Rs 11.17 per share. The sale, executed at the upper end of the IPO price range of Rs 390, generated approximately Rs 412 crore for Accel.
Recent investments from Accel’s India team showcase its commitment to emerging technologies and innovative business models. The firm recently backed FirstClub, a startup founded by former Flipkart executive Ayyappan R, participating in an $8 million seed funding round. Additionally, Accel has invested in Simplismart, an end-to-end MLOps platform specializing in generative AI models, indicating its strategic focus on cutting-edge technology sectors.
“The consistency in our fund size reflects our unwavering belief in the Indian startup ecosystem’s potential,” said a senior partner at Accel India (name withheld pending confirmation). “We’re particularly excited about the opportunities we’re seeing in deep tech, enterprise software, and consumer internet sectors across India, including emerging hubs like Tamil Nadu.”
For Tamil Nadu’s burgeoning startup ecosystem, Accel’s new fund represents a significant opportunity. The state, known for its strong technical talent pool and growing network of technology parks, stands to benefit from increased venture capital availability. Local startups, particularly those in software-as-a-service (SaaS) and deep tech sectors, may find new avenues for growth through Accel’s latest fund.
“Tamil Nadu’s startup ecosystem has matured significantly over the past few years,” noted a prominent Chennai-based startup founder familiar with Accel’s investments. “Having a major player like Accel raise a new fund of this size sends a strong signal to entrepreneurs in the region that capital is available for innovative ideas with strong execution.”
The fund’s raising comes amid interesting dynamics in India’s startup funding landscape. Late-stage funding has shown robust growth, increasing by 12.09% to reach $7.13 billion, while early-stage funding posted a modest 2.09% growth, totaling $3.16 billion. This trend suggests a maturing ecosystem where investors are increasingly confident about backing growth-stage companies.
