Accel has maintained its India fund size at $650 million for its eighth vehicle, even as other venture firms in the region are racing to raise increasingly larger pools of capital.
The firm had ample opportunity to raise “multi-billion dollars,” said Shekhar Kirani, partner at Accel, in an interview with TechCrunch. But unlike peers who have supersized their funds, Accel is holding steady based on a calculated analysis of India’s venture opportunity.
Peak XV has amassed $2.5 billion in its newest set of funds for the region, while Lightspeed has nearly doubled its India fund to $500 millio in recent years. Stellaris, which launched in 2017 with a $90 million fund, recently announced its third fund at $300 million.
“We have done a lot of historic studies in the U.S. and China. As funds go beyond $600-$650 million, historically, even in well established markets, building high quality returns becomes extremely hard,” said Kirani.
The strategy mirrors that of U.S. firm Benchmark, which has maintained relatively small fund sizes for decades while delivering outsized returns. According to industry estimates, Accel has consistently delivered the strongest returns of any venture fund in India, often by a significant margin. One notable success is food delivery startup Swiggy, where Anand Daniel led the first institutional investment at a $2 million valuation. Swiggy went public in November in what was the largest global technology IPO of 2024, at a valuation of $11.3 billion.
The firm’s discipline stems from its analysis of India’s startup opportunity. Accel estimates roughly 300 high-quality companies emerge annually at pre-seed to Series A stages. Of these, it aims to back about 40 through 60-70 total investments per fund cycle.
“We want to raise the right size early stage fund to be able to generate good returns,” said Daniel, noting that each additional dollar raised beyond a point makes it challenging to deliver the returns the firm targets.
Accel partners in India, Anand Daniel (Left) and Shekhar Kirani. Image: Accel
The approach comes as other Silicon Valley venture firms reassess their India strategies. Both Sequoia and Matrix have recently separated from their India affiliates. But Accel has doubled down on its hybrid model. “Either you build a completely independent fund, or just have the name in common or everything is centrally decided,” said Kirani. “What we have at Accel is the perfect combination.”
One of the places where this strategy is apparent is when the Accel team in India is able to pull in the global growth fund to write a larger check in an Indian startup, said Daniel.
The firm’s commitment to India spans more than 15 years, during which the market has seen both entries and exits by global venture firms. While India has emerged as one of the last significant growth markets for internet companies, firms like Battery Ventures and Omidyar have shifted focus away.
Returns have been a persistent concern for the industry. “Returns on capital in India have sucked historically,” Tiger Global partner Scott Shleifer told founders in 2023. The fate of the market is shifting. A record 13 Indian startups went public last year, with 25 more preparing to list, TechCrunch previously reported. As many as 10 Accel-backed startups could list this year.
As India’s digital infrastructure matures, questions are emerging about the next wave of opportunities. Indian startups have not traditionally excelled in certain domains – like cybersecurity – though both partners note that entrepreneurs and markets are maturing. There are also questions about whether India’s traditional advantage in offering comparable services at lower costs will persist as AI makes software development more efficient globally.
Accel’s latest fund reflects these evolving opportunities. The firm, backer of Flipkart, Myntra and Freshworks, is betting on wealthtech startups in urban India and software companies building niche products on AI platforms.
It has also intensified focus on what it terms “Bharat” – smaller towns and villages that it believes harbor the next wave of unicorns. “There’s a perception that rural means poor. But if you look at what the top 20% to 30% is spending there, it’s quite significant. We estimate it’s north of $250 billion,” said Daniel, adding that the top quintile in these markets often outspends half the urban population.
The startups that have made inroads in urban India may not end up replicating their success in Bharat, the partners cautioned. If the consumer behavior remains same in rural India, the incumbents stand to do well, said Kirani. “But if they value things differently, you may want to handle them a little bit more.”