Lightspeed is fine-tuning its India strategy around AI, targeting $250 million for a new early-stage fund, as the venture firm bets the technology will power the next wave of startups in one of the world’s biggest markets.
The Silicon Valley venture firm is already a major investor in artificial intelligence companies, including anthropic, xAIand Data bricks. In India, it has supported Sarvam AIone of the country’s leading language model developers and a startup selected by the Indian government to help develop sovereign AI models.
The new fund, Lightspeed India Partners V, will be half the size of its $500 million predecessorraised in 2022, and has already secured commitments for 80% of its $250 million goal, according to a letter sent to investors on Thursday and seen by TechCrunch.
At the end of April, Lightspeed revealed the new fund in a US regulatory filing, although the filing did not specify its target size. The Indian media had previously reported that the company was looking to raise between $300 and $350 million for the vehicle.
Lightspeed plans to begin investing from the new fund within two months and has designed it around an investment period of approximately two and a half years, according to the letter. Until then, you will continue to make your final investments from the existing fund.
A Lightspeed spokesman declined to comment.
Starting with the new fund, Lightspeed is also moving its India funds into the same fundraising cycle as its global funds for the first time, according to the investor letter. The change brings a regional business it established nearly two decades ago more in line with the rest of the company.
The move follows a similar change by rival firm Accel, which in August raised its latest fund of $550 million in India along with new funding from the US and Europe and a global growth vehicle as part of a coordinated $3.5 billion fundraising effort. It was the first time Accel had raised all four funds simultaneously.
According to the letter, the fund’s size of $250 million is in line with how quickly Lightspeed is currently investing and its shorter investment period. Lightspeed suggested to investors that the smaller size allows them to focus on individual deals rather than fund size, and raise their next fund sooner.
The new fund also marks an increased focus on AI for Lightspeed’s early-stage investment strategy in the region. The investment thesis outlined in the letter anticipates that AI will create more value in India than the Internet, and the fund will seek AI companies across India and Southeast Asia.
India is yet to produce a major developer of cutting-edge AI models on the global stage and has attracted much less investment in AI than the United States and China. However, investors increasingly see an opportunity for India at the applications layer, taking advantage of the country’s large pool of software developers and its decades-long history as a hub for software and technology services.
The new $250 million Indian vehicle is a fraction of the capital available on Lightspeed’s global platform. The firm, which manages more than $65 billion in assets worldwide, raised $9 billion in several new funds last December, the largest fundraising in its history. the total included $980 million early stage venture fund.
Lightspeed’s dedicated funds in India and Southeast Asia represent just a portion of the capital the company has put to work in the region. Those funds have deployed approximately $900 million, while Lightspeed’s global funds have invested another $1.6 billion to support regional portfolio companies, according to the letter to investors.
The decision to dedicate its newest regional fund entirely to AI also marks a sharper thematic focus for Lightspeed in a market where it has historically invested across sectors. Its portfolio in India spans businesses including fast commerce, consumer internet, software and home services.
Lightspeed’s bets in India have included companies such as fast trading startup Zeptoaudio platform pocket FMhome help startup snabbitrooftop solar startup SolarSquareand a variety of enterprise software businesses.
The same team that ran Lightspeed’s previous four funds in India will manage the new fund, according to the letter.
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