General Catalyst, one of the largest US venture capital firms is in talks to acquire an India-focused VC as part of efforts to expand its presence in South Asia’s fast-growing startup market, three sources familiar with the matter told TechCrunch.
The deal will allow General Catalyst to tap deeper into India’s vibrant tech scene that has lured more than $100 billion in startup investment since 2010. General Catalyst has been working with Venture Highway in recent months on the deal, according to two sources familiar with the matter. The deal with Venture Highway has not been finalized, so things including the target fund could change, the sources warned, requesting anonymity as the discussion is private.
General Catalyst has backed about a dozen and a half startups in India — including fintech giant CRED, used car marketplace Spinny and healthtech Orange Health — but the venture firm has been looking to significantly expand its presence in the country for more than a year. several people familiar with the matter said.
General Catalyst and Venture Highway did not respond to requests for comment Thursday.
The U.S. company held talks with several senior people in India last year, looking to find an India-based partner, multiple people familiar with the matter said. Sometime last year, it also began evaluating the possibility of acquiring an India-focused fund and using that route to build a wider presence in the country, the people said.
This is not the first time that a global business house is exploring this route to expand into India. Accel acquired Erasmic, which at the time had about $10 million, more than a decade ago, creating Accel India.
General Catalyst, which has more than $25 billion in assets under management, plans to invest more than $500 million in India over the next three to four years, another person familiar with the matter said. Its new focus on India follows the company’s expansion into Europe last year, agreeing to merge with La Famiglia, an investor in several high-profile early-stage startups, including AI firm Mistral.
Goldman Sachs’ view of India. (Image: Goldman Sachs)
Venture Highway – co-founded by Neeraj Arora, who was instrumental in Meta’s acquisition of WhatsApp – is a New Delhi-based venture capital firm focused on supporting early-stage startups. The company, whose last round of funding (the second) was around $80 million, counts Meesho, ShareChat and Moglix among its portfolio startups. Samir Sood, one of her other partners, recently resigned. The company also recently sold some of its stake in Meesho, TechCrunch first reported.
India, one of the largest startup ecosystems in the world, has attracted several heavyweights including Sequoia, Lightspeed, Accel, Tiger Global, SoftBank and Insight Partners in the last decade and a half. A number of other high-profile venture firms, such as Coatue Management and QED and Andreessen Horowitz, have also backed Indian startups in recent years as they pick up new companies trying to serve the fast-growing Internet market of more than 700 million users.
Investing in India has proved a unique challenge for many global venture firms that have entered the country or explored such a possibility, said a partner at an India-based venture firm. “India has huge potential, but we don’t yet have the level of spending that you see in the US, nor do we have the size of returns that you might find elsewhere,” the investor said, warning that venture firms need to make peace with the fact that the time horizon required for a longer payday is much longer in India.
But funds globally – including asset managers – are increasingly expanding their focus on India, whose $4 trillion GDP is expected to double by the end of the decade, according to Morgan Stanley. Invesco, T. Rowe Price, BlackRock, Fidelity and UBS have backed several Indian startups through their mutual funds over the past five years.
“Instead of thinking about average GDP, look at how many households in India will make more than $50,000 to $75,000 a year by 2030. Our advantage is developers,” said Anu Hariharan, founder of VC firm Avra and former head of YC Continuity. posted on X last week.
“India will have ~15 million developers in the next decade making $50,000 to $75,000 a year. For every developer household, there is a financial services household and a healthcare household that will also earn $50,000 to $75,000 per year. This equates to ~45 million households (who will earn more than $60,000 a year by 2030.) By comparison, the UK today has 28 million households earning $45,000 a year.”
