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Founded by former WhatsApp business head Neeraj Arora, the Venture Highway brand will cease to exist transitioning into General Catalyst India from here on. New Delhi-based Venture Highway counts unicorns such as Meesho and Moglix in its portfolio. Along with Arora, managing director Priya Mohan will lead the India efforts for General Catalyst.
The development comes amid a larger reset in the global venture capital industry after the exuberance of Covid years. Marquee VC funds like Sequoia Capital decided to pull out of India last year after having set up its India franchise in 2006, signalling the challenges faced by tech-focussed funds in clocking exits and distributing cash to their limited partners.
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Bullish on India
The new India entity will be a part of General Catalyst’s global fund, for which it is raising $6 billion, according to a report in The Financial Times. The firm presently manages over $25 billion in assets globally.
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For General Catalyst, which has backed Indian startups such as Cred, Spinny and Uni, the acquisition marks a formal entry into the country with a team on the ground. Last year, General Catalyst merged with Europe’s La Famiglia.
“We will invest somewhere between $500 million to $1 billion in India, which is a substantial amount of capital and far greater than what we’ve done before because now we have a team taking care of it,” Hemant Taneja, CEO and managing director, General Catalyst told ET in an interview.
“It’s a single global partnership that will invest across the US, Europe and India. In fact, through this, we learn on how Venture Highway used to serve the founder community at the seed stage as a specialist in that category,” Taneja added.
“We (Venture Highway) have been investing from fund-III, and as of now, we will ringfence the funds that we’ve already been investing. So post this, Venture Highway will become General Catalyst India. There is no purchase of portfolio…we will continue to work with and serve our portfolio companies,” Mohan said.
“Interesting thing about our portfolio is that there are a lot of synergies…there are no competing companies and there are a lot of companies in our portfolio that will become interesting for General Catalyst as we go forward,” she added.
India opportunity
Elaborating on Venture Highway’s decision to merge with General Catalyst, Arora said, “We could have continued to make seed investments from a smaller fund, which keeps doing well as it’s a smaller fund and easier to return. But the opportunity and ambition that we have now to participate in the venture ecosystem in India is much larger. That is where this partnership makes a lot of sense.”
Arora added that over the past few years, the Indian startup ecosystem has seen a steady flow of exits through IPOs – a key question for risk capital investors backing Indian funds. “The venture ecosystem in India has gone through its ups and downs over the last ten years. But now it feels like there’s a very sustained flow of companies that are creating meaningful outcomes for their investors — something that didn’t happen for a very long time,” Arora said.
In October last year, ET reported that Venture Highway sold a part of its stake in ecommerce platform Meesho to WestBridge Capital in a secondary sale.
“Once in a while there was a blockbuster Flipkart deal or some company going public but there was no consistent flow of capital that was going back to investors. Now, from that perspective, India is ready. If you look at what has happened in India in the last 1-2 years in terms of companies going public and what is coming over the next few months,” he added.
Venture churn
General Catalyst’s India bet comes at a time when multiple global venture capital firms have either pulled out or slowed down on India over the last 12-18 months. Sequoia Capital’s India partnership was hived off into Peak XV Partners while Ebay founder Pierre Omidyar’s Omidyar Network shuttered operations here.
Notwithstanding the exits, General Catalyst isn’t the first global firm to mark an India entry in recent months.
Another Silicon Valley-based investor Tribe Capital has set up an Indian unit that will not only make investments but also build and buy out companies here – a departure from the typical framework under which global venture capital firms operate in India.
Taneja underscored that General Catalyst is not opting for the route taken by other global firms of having Indian franchises.“To me, if you think about the attempts in the past in the industry…some have worked, some haven’t. I deeply believe that having collaborative partners across our key geographies that are learning from each other and cross-pollinating is the best way to go,” he said.
“It is better than having separate pools of capital, separate economics and some (profit) sharing. That model is a way to create more wealth for individuals but I don’t think it’s a way to create a lasting institution, which is our collective aspiration,” he added.