Lightspeed cuts India fund target to $300m-$350m

US-based venture capital firm Lightspeed has cut the target for its fifth India-focused fund to between US$300 million and US$350 million from as much as US$500 million.

The firm is shifting its focus toward early-stage AI and deeptech investments.

The reset also follows questions around some of its Indian growth-stage investments including Byju’s, Oyo, ShareChat, Udaan, PhysicsWallah, Razorpay and Zepto.

Lightspeed has recently backed AI startup Sarvam and spacetech firm Pixxel.

Peak XV, Accel, Nexus and Stellaris have also raised India-focused vehicles with more attention on AI and deeptech.

🔗 Source: The Economic Times

🧠 Food for thought

Implications, context, and why it matters.

Lightspeed trims its fund and returns to earlier India sizes

The new US$300 million to US$350 million fund is smaller than its predecessor. It sits closer to Lightspeed’s earlier India funds, before its US$500 million India and Southeast Asia fund (Fund IV) in 2022 1.
Its first three India funds came in at US$135 million, US$180 million, and US$275 million. That marks a steady climb over time 2.
A smaller pool fits an early-stage approach. Venture capital firms usually back more companies at this stage and write smaller first checks 3.
Deeptech matches that pattern. These startups often need patient funding early, then much larger rounds for manufacturing and overseas growth 3.

India startups lean toward deeptech as consumer internet cools

Across India, investors are pulling back from some consumer internet models that burn through cash and ran into trouble in the downturn 2.
That change lines up with a broader move in Indian venture capital. Deeptech’s share of private equity and venture capital funding rose from 4% in 2016 to nearly 15% in 2025 3.
Many investors now favor startups with defensible intellectual property, such as proprietary technology or patents, instead of businesses chasing costly user growth.
Support for that trend is building. The India Deep Tech Alliance, an industry group focused on advancing India’s deeptech sector, has committed US$1 billion to Indian AI startups 4.