Accel has decided to keep its India fund size at $650 million for its eighth vehicle, despite other venture firms raising larger amounts. Shekhar Kirani, partner at Accel, explained that the firm had the opportunity to raise billions, but chose to maintain a more cautious approach based on a careful analysis of India’s venture market. Accel believes that funds exceeding $600-$650 million could make it difficult to generate high-quality returns.
The Landscape of Venture Funds in India
While Accel sticks to its strategy, other firms like Peak XV, Lightspeed, and Stellaris have significantly increased their fund sizes. Peak XV raised $2.5 billion, Lightspeed nearly doubled its fund to $500 million, and Stellaris raised $300 million for its third fund. Despite this trend, Accel maintains its strategy of keeping fund sizes smaller to ensure high returns, much like U.S. firm Benchmark, which has had outsized returns with smaller funds.
Accel’s Focus on India’s Emerging Startup Opportunities
Accel’s approach is centered around backing high-quality startups at the pre-seed to Series A stages. The firm estimates that around 300 such companies emerge every year in India, and it plans to back approximately 40 of them through 60 to 70 investments per fund cycle. Notable success stories include their early investment in Swiggy, which went public in 2024 with a valuation of $11.3 billion. This disciplined approach has allowed Accel to deliver some of the highest returns among venture funds in India.
Investing in Bharat: Accel’s Focus on Rural India
Accel is also turning its attention to smaller towns and villages in India, which it terms “Bharat.” The firm sees significant potential in these areas, with estimates suggesting that the top 20%-30% of consumers in rural India spend over $250 billion. Accel is focusing on startups in wealth tech and AI-driven software, particularly in urban India and Bharat. However, Accel’s partners caution that consumer behavior may differ in rural India, requiring a tailored approach for success in these markets.
