Sequoia Capital to raise $7 bn warchest for investments in the US, China, India

After sounding out its portfolio companies on tough times ahead on account of the ongoing Covid-19 pandemic, Sequoia Capital is readying a $7 billion warchest for multiple markets in which it is an active investor, according to multiple media reports. 

The Menlo Park, California headquartered venture capital firm will raise an aggregate of $7 billion across separate funds for investments in the US, China and India, the Financial Times reported on Thursday citing sources. The firm will close fundraising by July, the report added. 

The development was first reported by the Wall Street Journal on March 18. 

The latest fundraising exercise is separate from the over-subscribed $8 billion Global Growth Fund the storied venture capital firm raised two years ago, the Financial Times report said.

Earlier this month, the firm alerted founders and CEOs of its portfolio companies on how the Covid-19 outbreak could trigger a prolonged economic slump that would adversely impact the startup and venture capital ecosystem. 

In a memo released on March 6 memo titled ‘Coronavirus: The Black Swan of 2020’, the firm warned that it would take considerable time, perhaps several quarters, to contain the virus, and even longer for the global economy to recover its footing.

The note overall anticipated an interim period of hardship that will possibly see future funding rounds become harder to close and a softening of valuations as startups struggle to meet business and performance milestones.

Known for its early investments in Google, PayPal, and ByteDance globally, Sequoia's most recent India-focused fundraising activity was for its maiden seed fund. Dubbed Sequoia Capital India Seed Fund I Ltd, registered in Mauritius, the fund was set up to power its startup accelerator and incubation programme Surge which makes early stage investments in India. 

The final close of the fund was done at around $200 million, though Sequoia has not officially disclosed the amount.

In August 2018, the firm closed its sixth India fund at $695 million to invest in the country and Southeast Asia. The fund invests in the technology, consumer and healthcare sectors. 

Later that year in October, the firm split its investment team into venture and growth verticals in line with a strategy it follows in the US and China.

Sequoia has invested in about 150 startups in India including unicorns such as Ola, Oyo Rooms, Druva, MuSigma and Zomato. Several portfolio companies have had M&A events including GlobalLogic, Star Health, Scio Health Analytics, Prizm Payments, FreeCharge and Citrus Payments. Multiple portfolio companies have also gone public, including Prataap Snacks, JustDial, Ujjivan, Equitas and QuickHeal. 

In 2012, Sequoia India established a presence in Southeast Asia. Its investments there include Go-Jek, Tokopedia and Traveloka, which now rank among Indonesia's largest unicorns.