General Catalyst, a Silicon Valley-based venture capital group, is expanding its presence in India by joining forces with local venture capital firm Venture Highway and committing $500 to $1 billion to invest in the country.
Venture Highway’s investments include social commerce startup Meesho and B2B industrial marketplace Moglix. TechCrunch reported in January that the two venture capital firms had entered into a deal.
The deal will see the combined entity design a multi-stage investment strategy for General Catalyst in India, covering early-stage and growth-stage startups across industries, said Venture Highway founder Neeraj Arora and Her GP, Priya Mohan, in an interview with TechCrunch. .
Venture Highway, which raised $78.6 million for its second fund in 2020, has traditionally focused on early-stage investments. As part of the General Catalyst team, she will expand her remit to startups. “Our vision is to participate in building a series of companies that will not only go public, but will also be needles for the economy,” Mohan said.
General Catalyst, which manages more than $25 billion in assets, plans to invest between $500 billion and $1 billion in India over the next three years, said Arora, who previously served as chief operating officer at WhatsApp and was instrumental in in the instant messaging application. sale on Meta.
The deal places General Catalyst as one of the largest venture capital firms in India, along with Lightspeed, Accel, Elevation and Nexus, which have raised between $500 million and $700 million in their recent funds. Peak XV Partners (formerly Sequoia India and Southeast Asia) leads the pack, with a $2 billion fund earmarked for investments in the country.
General Catalyst is not acquiring Venture Highway’s portfolio, but will consider it “very much part of the GC portfolio going forward,” Hemant Taneja, CEO of General Catalyst, told TechCrunch.
“We want to support them the same way we support any of our companies in India or anywhere else in the world,” he said.
The two companies began exploring ways to work together several years ago, but, Arora said, the timing was right now. “We could go out and raise more capital. This was one of the options on the table. But thinking from the very beginning, when we think about the opportunity that exists in India today and what our ambitions are, it made sense to join hands with General Catalyst,” he said.
India has become one of the world’s fastest-growing major economies over the past decade, with its GDP growth rate reaching 8.2% in the last financial year. Favorable policy changes have spurred growth across industries, attracting some of the world’s largest investors.
SoftBank, Tiger Global, Peak XV, Lightspeed, Accel and others have pumped about $100 billion into Indian tech startups in the last five years alone, and are starting to see some returns as many of these companies go public. But “returns on capital in India are historically abysmal,” Tiger Global’s Scott Shleifer told a virtual gathering of Indian entrepreneurs last year.
India is not new territory for General Catalyst, which has been investing in the country for over a decade. Its portfolio includes fintech unicorn CRED, used car marketplace Spinny and healthtech startup Orange Health. The company recently co-led a funding round with Indian conglomerate Tata, which was raised by Alsym Energy, a company that develops non-flammable rechargeable batteries.
Taneja expects more collaborations with Indian conglomerates in the future. “I think many of the conglomerates in India are very entrepreneurial and will play an important role in India’s growth opportunity,” he said. “Some of the opportunities we want to invest in or help build in India, it might make sense to partner with them fundamentally.”
“When you’re transforming industries, no matter where you are in the world, you need to work with industry leaders. That’s what we do in healthcare here [in the U.S.] with many health care systems; we are actively working with various governments on policy and issues and things like artificial intelligence,” he added.
Thursday’s announcement follows a similar move by General Catalyst in Europe last year, when the company revealed plans to merge with Berlin-based venture firm La Famiglia. Taneja declined to comment on whether his company would seek to replicate the model in other markets. General Catalyst in advanced stage to close $6 billion fund, FT mentionted in April.
