More love for Indian startups: a new $305 million fund from Accel Partners

Accel Partners has just announced a new US$305 million fund for India to invest in very early stage companies as well as those already in the growth trajectory. “The investment focus area will cover consumer, enterprise software, mobile, and healthcare businesses,” Subrata Mitra, partner with the VC firm, wrote on the company blog.

This is Accel’s fourth fund for India.

Accel has a star-studded portfolio of companies in India, including ecommerce major Flipkart, analytics company MuSigma, and cloud-based customer support provider Freshdesk. Since its Indian entry in 2005, it has had a few successful exits as well, including Myntra, which was acquired by Flipkart, TaxiForSure, which was acquired by Ola, and Virident, which was acquired by Western Digital.

The venture capital flow into India moved to a new orbit last year, with nearly US$5 billion of startup funding. A number of big players have been pumping money into India. The leader of the pack is Tiger Global, the lead investor in Flipkart, which raised a whopping US$1.7 billion in 2014 alone. Tiger Global raised US$4 billion in two rounds last year, and a substantial portion of that can be expected to come to India.

Sequoia is another big player from Silicon Valley, which raised a US$530 million India-focused fund last year. India-based VCs too are pulling in big bucks. Earlier this month, Saif Partners raised a US$350 million fund, and late last year, Lightbox VC raised a second fund of US$100 million. Investors focused on just the early stage startups have also been successful in raising money for India. 500 Startups and Blume Ventures have recently raised their second funds.

There is growing interest from the east as well. SoftBank of Japan made three big investments last year in Snapdeal, Ola, and Housing. What’s more, it has pledged an investment of US$10 billion into India over the next few years.

The rapid spread of smartphone and internet usage in a large population is one of the main factors making Indian tech startups attractive. An improvement in economic sentiment following the change in government is also making India the place to go for venture capital investors.