Flipkart, Mu Sigma backer Accel Partners raises $305M in new India-focused early-stage VC fund

Global venture capital firm Accel Partners, which has backed top-tier consumer internet and other tech ventures in India such as Flipkart, Mu Sigma, BookMyShow, CommonFloor, PropTiger and Freshdesk, has raised $305 million (Rs 1,900 crore) for its new fund Accel India IV.

This is just about twice the size of its previous fund in US dollar terms but packs in even higher deployable cash in local currency given the depreciation of the Indian rupee over the last two years.

Accel Partners, which has in the past also backed marquee names in digital business including Facebook, had raised $155 million (Rs 785 crore then) through Accel India III in November 2011. Prior to that, Accel India Venture Fund II raised $60 million in 2008.

The firm will continue to focus on seed and early-stage venture funding but said it may also pursue some growth equity deals.

Even as the new fund will still revolve around early-stage it will also selectively pursue growth equity opportunities in technology companies in India, according to Subrata Mitra, partner, Accel Partners India. Earlier, Accel has done growth equity investment in online movie and events ticketing venture BookMyShow.

The investment focus area of the new fund will cover consumer, enterprise software, mobile and healthcare businesses.

"We are excited about the entrepreneurial energy in India and we look forward to working with the next generation of business leaders," Mitra said.

The new fund comes after the firm saw a clutch of successful exits in the country including Myntra (acquired by another portfolio firm Flipkart), TaxiForSure (acquired by Ola) and Virident (acquired by Western Digital). Other deals included Babyoye, which had struggled to raise further capital and was acquired by Mahindra Group.

Accel Partners had set up India shop in 2008 after it merged Bangalore-based early-stage investment firm Erasmic Venture Fund with itself. Erasmic already had a small investment fund in place.

Accel Partners has 10 investment professionals based in India, led by the four partners – Mahendran Balachandran, Shekhar Kirani, Subrata Mitra and Prashanth Prakash.

It also counts two venture development team members—Ajay Sethi (former COO of Ezetap) and independent strategic advisor Dilip James—besides the three-member business operations unit in India.

Accel Partners' new fund comes close on the heels of SAIF Partners raising $350 million for its new India fund. SAIF, which is a multi-stage investor, raised what is the second-largest corpus raised by an India-dedicated VC firm in the recent past. Last year, Sequoia had raised $530 million in its new India fund.

In the past, Helion raised $255 million in its second India fund three years ago; Mayfield scooped $108 million in its second India-focused fund and Inventus raised $106 million fund.

Among other peers, IDG had floated its new India fund in February 2013 where it sought to raise $175 million. It is yet to declare any fundraising milestone.

Among other firms, IvyCap is aiming to raise around $200 million in its second fund and joins other peers such as Kae Capital, Blume Ventures to woo investors to back Indian companies.

Another prominent VC firm Nexus, which had raised $270 million in its third fund in 2012, had last year filed to raise more money. Nexus is yet to make a disclosure on the progress of the fundraising process of this vehicle.

(Edited by Joby Puthuparampil Johnson)