Sequoia Capital India, the largest venture capital firm operating in the country, is launching a startup accelerator and incubation programme called Surge where it will pick up 10–20 early stage startups twice every year and invest $1.5 million in each of them at the start of the programme. The new initiative, where Sequoia is likely to invest over $100 million over the next four-five years, said two people familiar with the development.
Sequoia’s push, which is perhaps the largest such programme launched in India, is likely to shake up the sluggish early stage financing market and further spur entrepreneurial activity, according to experts tracking the space. The programme will target startups both in India and Southeast Asia across sectors like consumer internet, deep tech, enterprise software, healthcare technology, fintech, crypto or direct-to-consumer brands.
“The trigger is the realisation that India is doing so well and the tech ecosystem is exploding. On the other hand, we ran a bunch of founders’ surveys and found they are underserved,” said Shailendra Singh, MD at Sequoia Capital India. He added that unlike other accelerator programmes, which take startups from zero to seed funding, Surge will take them from seed to series A. “This programme will work independent of Sequoia and that is why we have a separate brand. We will also have a different team for it.”
Each batch will last for about 16 weeks and will also see the firm bring top entrepreneurs from its portfolio like hospitality major Oyo’s Ritesh Agarwal, restaurant discovery and food delivery company Zomato’s Deepinder Goyal, Indonesian ride hailing major Go-Jek’s Nadiem Makrim and software player Freshworks’ Girish Mathrubootham as mentors for these startups. Besides, startups will also have access to an advanced management programme (AMP) by Sequoia’s US unit, which is known as an early backer of companies like Google, Paypal and WhatsApp.
At the end of the programme, Sequoia also plans to have an investor week for these startups where it will invite other venture capital firms.
Sequoia has had some success in backing startups at the idea stage in the past like payments player Prizm (acquired by Hitachi) and Citrus (bought by PayU) besides SCIO Health (acquired by EXLService). Over the last 10 years, it has done 91 early stage investments, which is expected to increase with the Surge programme.
The development comes at a time when angel and seed-stage funding has been on a steady decline falling to 150 as of September 2018 from 400 in 2015, according to a study from Bain and Indian Private Equity and Venture Capital Association (IVCA). This has been due to both the issue of ‘angel tax’ and fall in startup formation, which has started to pick up now. India added 1,200 new technology startups in 2018 compared with 1,000 last year, software lobby group Nasscom had said in a report on the startup ecosystem in October.