Silicon Valley-based venture capital group General Catalyst is expanding its presence in India by partnering with local venture firm Venture Highway to allocate $500 million to $1 billion for investments 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 firms were in talks for a deal.
With the deal, the combined company will develop a multi-stage investment strategy for General Catalyst in India targeting early- to growth-stage startups across industries, Venture Highway founder Neeraj Arora and general partner Priya Mohan told TechCrunch in an interview.
VentureHighway, which raised $78.6 million in its second fund in 2020, has traditionally focused on early-stage investments. As part of the General Catalyst team, it will expand its remit to incubating startups. “Our vision is to be involved in building a lot of companies that will make a difference in the economy, not just take them public,” Mohan said.
General Catalyst, which manages more than $25 billion in assets, plans to invest $500 million to $1 billion in India over the next three years, said Arora, who previously served as chief operating officer at WhatsApp and played a key role in the instant messaging app's sale to Meta.
The deal puts General Catalyst among the largest venture capital firms in India, joining the likes of Lightspeed, Accel, Elevation and Nexus, which have recently raised between $500 million and $700 million each. With $2 billion in funds earmarked for investments in India, PeakXV Partners (formerly Sequoia India & Southeast Asia) is among the largest venture capital firms in India.
General Catalyst is not acquiring Venture Highway's portfolio, but will view the company as “an important part of the GC portfolio going forward,” General Catalyst CEO Hemant Taneja told TechCrunch.
“We want to support them just as we support our companies in India and other parts of the world,” he said.
The two companies had been exploring the idea of joining forces for several years, but Arora said the time was right. “We could have gone outside and raised more capital. That was an option. But just from first principles, given the opportunity in India today and our ambitions, it made sense to partner with General Catalyst,” Arora said.
India has become one of the world's fastest growing major economies over the past decade, with GDP growth reaching 8.2% in the latest fiscal year, as favourable policy changes spur growth across industries and attract some of the world's largest investors.
Firms including SoftBank, Tiger Global, PeakXV, Lightspeed and Accel have invested about $100 billion in Indian tech startups over the past five years alone, and as many of these companies go public, they are starting to see some profits.But “india's returns on capital have been abysmal historically,” Tiger Global's Scott Schleifer said at a virtual meetup with Indian entrepreneurs last year.
India is not new territory for General Catalyst; it 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 firm recently led a funding round alongside Indian conglomerate Tata to raise capital for Alsim Energy, a developer of non-flammable rechargeable batteries.
Taneja expects to see more partnerships with Indian conglomerates in the future. “A lot of the Indian conglomerates are very entrepreneurial and I believe they will play a key role in India's growth opportunity,” he said. “It may make sense to work with them in depth on some of the opportunities we want to invest in or help build in India.”
“When you're transforming an industry, you need to work with industry leaders wherever they are in the world. We're doing that in healthcare. [in the U.S.] “We work with a lot of health systems and we're actively working with governments on policies and issues, AI and all that,” he added.
Thursday's announcement follows a similar move General Catalyst made in Europe last year, when it announced plans to merge with Berlin-based venture firm La Familia LLC. Taneja declined to comment on whether his firm would seek to replicate the model in other markets. General Catalyst is nearing the end of closing a $6 billion fund, the FT reported in April.