Accel is to invest $650 million in growing Indian and South-East businesses, through its largest ever fund launch in the region. The global venture capital firm is today unveiling its seventh specialist venture fund in the region – and its largest to date – some 16 years after its first fund raised $10 million.
Accel’s latest venture – like its predecessor funds – will focus on early-stage businesses, with the fund typically investing between $1 million and $5 million in seed and pre-seed funding rounds at companies raising cash. The firm tends to invest at an earlier stage than other venture capitalists – to date, it is the first institutional investor in 87% of its investments, and 95% of its investments are at the seed or series A stage.
“We are patient investors,” says Prayank Swaroop, an Accel partner. “We like to invest in companies at as early a stage as possible in order to be in the best position to support their growth.”
Previous Accel investments in the region have included early-stage businesses that have gone on to become household names such as Flipkart and Freshworks. Accel partner Prashanth Prakash adds: “Since Accel’s early days, our investment approach has been grounded in the prepared mind – we study a particular technology shift, develop a thesis, and when we come across a start-up that is poised to succeed, we are prepared to partner quickly.”
In some cases, portfolio companies in the funds are participants in Accel’s SeedtoScale and Atoms programs, which are aimed at complete start-ups; in many cases, these firms have little or no revenues – “some have barely written a line of code,” says Swaroop.
Other investee businesses are a little more mature, though Accel stresses the need to still provide more than just financial support. “We believe our insights from the Indian market and the global Accel platform can help start-ups in the region from seed to scale,” Swaroop adds.
That is important, particularly as the entrepreneurial ecosystem across South-East Asia continues to accelerate. One recent report found that 25 start-ups from six South-East Asian countries achieved unicorn status with a $1 billion valuation in 2021, with a combined valuation at $55.4 billion. By contrast just 21 companies had reached unicorn status from the region between 2013 and 2020.
The geographic exposure of Accel’s funds has developed in line with that trend; early funds tended to invest almost entirely in India, while the later iterations have been more diversified. Accel expects its latest launch to invest across the whole of the region, says Prakash.
“There’s no doubt that India has led the evolution of the start-up space in this part of the world, but we have seen its emergence in other markets too,” he says. “Singapore has a history of entrepreneurialism, but Indonesia, Vietnam and the Philippines are seeing something similar.”
In any case, many of the businesses in which Accel invests have global appeal, rather than simply focusing on their domestic or regional market. That’s particularly the case with the growing number of technology providers in Accel’s portfolio, with business models such as software-as-a-service making it much more straightforward for early-stage companies to sell to a global audience.
Accel’s funds have a particular focus on such companies, as well as businesses beyond the technology sector but which are enabled by technology in some way. “Technology is at the core of what we do,” says Prakash. “South-East Asia’s start-up ecosystem is thriving and very interesting innovation is being done here; the ideas are unique to the region, but the start-ups have global ambitions.”
Accel sees its support and mentorship – alongside its financing – as key to businesses as they seek to fulfill that potential. The firm effectively operates as the convenor a community of start-ups, with founders sharing ideas and seeking help from one another. It also employs its own specialist advisers in areas such as recruitment, marketing and sales, to provide support for investee companies lacking skills or experience. And it introduces these companies to partners throughout its global network.
“We think of our community as our secret sauce,” says Swaroop. “It’s an amazing support network spanning everyone from recent college graduates to CEOs who have taken their businesses through IPOs, so there is a broad range of expertise and experience to leverage.”