Omidyar Network, backed by eBay founder Pierre Omidyar, is shutting down its India operations, two sources familiar with the matter told TechCrunch, in a surprising development for the venture firm that has backed nearly 75 startups in its marketplace South Asia.
TechCrunch was unable to determine why Omidyar decided to abruptly pull out of the Indian market, a development shared with the local team on Monday, a source familiar with the matter said, requesting anonymity as the matter is private.
Omidyar Network India unveiled five new investments in India in the past two months, and its executives took part in a public conference as recently as Monday.
The company did not respond to a request for comment Monday. Some of its partners in India also did not respond. After the story was published, Omidyar Network confirmed it would not be making any further investments in India, but did not say what was happening to local staff.
“Having achieved our primary objective of catalyzing impact, Omidyar Network India will not be making any further investments in India,” a company spokesperson said in a statement.
A slide from Omidyar Network India’s investor presentation.
A separate person familiar with the situation said the Indian team plans to try to reunite and raise money from abroad and start a new fund.
The Omidyar Network aimed to support startups in India that, at least on paper, were solving problems faced by half a billion people in the country. Portfolio startups include 1mg, Bounce, Bijak, DealShare, Doubtnut, Entri, HealthKart, Indifi, M2P and Pratilipi.
As of July this year, Omidyar Network India had about $673 million in cumulative assets under management and startups in its portfolio reached 735 million people, according to an investor presentation.
2023 has been a tough year for the Omidyar Network India team. Doubtnut, a startup that raised more than $50 million, sold for $10 million this month. And ZestMoney, once valued at nearly $450 million, also announced it was shutting down. Both counted Omidyar Network India among their supporters.
India has emerged as a key market for venture and private equity investors over the past decade as startups scale up to serve the world’s most populous market. “India is the new China and the fastest growing major economy in the next decade and beyond. We believe India offers the most attractive long-term investment attraction in our universe,” Baron Capital said in a quarterly report this year.
But it is also true that many business investors have struggled to make money in India.
Tiger Global’s Scott Shleifer said earlier this year on a call with Indian businessmen that he believed the South Asian market would have the world’s highest equity returns going forward, but admitted the country had historically underperformed the giant based in New York.
“Capital returns in India have historically been poor. If you look at the top Internet companies in the market, whether it’s Google, Facebook, Alibaba or Tencent, the revenue for them was greater than the cost a decade ago. You’ve had a great legacy of the last 17-18 years of materially profitable Internet companies. So the returns on Internet stocks became very high and the returns for investors were really high. But that did not happen in India,” he said.
