Lightspeed India, focused on being first institutional capital

We get asked a lot about what our view is on the India market, what stage we invest at and what has been keeping us busy. So here’s a brief snapshot…

We like the expanding technology opportunity – India now has nearly 100 million real Internet users. The opportunity is set to expand further with the common tax code (GST), a common financial stack (Aadhar, UPI, e-KYC etc.) and expanded Internet access (Reliance Jio-initiated data price war), underscored by steady GDP growth. And India now has thousands of newly blooded (and bloodied!) founders, thanks to last year’s tremendous expansion in new venture financing.

The trick now is not to lose heart by focusing just on the shortcomings —while painful, growth financing downturns are a normal part of the cyclicality of the financing environment, and the financing market will come back, along with exits. And the ecosystem — investors, founders, employees, customers — will learn from the last couple of years about what it means to build fundamentally sound businesses for different segments of Indian consumers (India, Bharat) and businesses (large corporates, SMEs, traders, individual service providers).

Within the context of this expanding opportunity set, Lightspeed in India has been expanding steadily over the past five years, with a focus on being first institutional capital.

What do we mean by first institutional capital? In a seed, we are usually the first institution to invest, after founders, high networth individuals (HNIs) and informal angel groups. Our seed investments are generally in the range of $500,000 to $1 million. In a Series A, we are generally the first large institutional cheque and come in pre-launch, pre-revenue or early revenue. Our Series A investments are in the range of $2 to $5 million.

We tilted significantly toward being first institutional capital in 2011. Prior to 2011, 75% of our deals were Series B/C on a small base of four investments. 2011 onward, we have done nearly twenty investments of which ~50% have been seed deals and ~85% have been as first institutional capital (seed or series A).

We accelerated our investing pace in 2015, with a new India-dedicated fund and five new investments. We invested at a higher pace in 2016 with five new commitments in the first nine months of 2016. We have also expanded our team significantly — more on that in a later post.

Active investments where our first cheque was a seed cheque include Craftsvilla, Limeroad, Oyo Rooms and Oku Tech, among others. Active investments where our first cheque was a Series A cheque include Indian Energy Exchange, OneAssist, Freshmenu, MagicPin and others. Our active Series B/C deals include Byjus, Itz Cash and Shuttl. We also have our fair share of companies that have not worked out.

We’re optimistic about the future — case in point: Lightspeed India has several undisclosed early-stage investments made in 2016. And going forward, we are looking at consumer technology investments in digital media, health, financial services and education. We are also looking at business technology investments in areas such as b2b marketplaces, payments and enterprise software.

Let’s go build big companies together!

~ The Lightspeed India team