Peak XV, the largest venture firm focused on India and Southeast Asia, is reducing the size of some of its funds and lowering fees as it seeks “closer collaboration” with its limited partners.
The company, which has secured capital commitments totaling $2.85 billion in mid-2022, told backers on Tuesday night that they would receive $465 million from the 2022 Vintage Fund, according to a letter to investors seen by TechCrunch. It announced that the dollar debt would be waived.
The region's largest venture group has not only scaled back its growth and multistage funds (it closed five of them in 2022), but also reduced the amount it charges backers and turned management fees into profits. The percentage of interest collected on these loans is now 2%, down from 2.5% and 30%, respectively.
There are performance-based considerations. The letter states that Peak XV will maintain a provision to amend the retained interest up to 30% after achieving a 3x distribution to paid-in capital ratio. The economics for seed and venture-focused funds remain unchanged.
Peak XV had no comment.
The move comes more than a year after Peak XV was separated from Sequoia. The prestigious venture firm has announced that it will separate its China and India/Southeast Asia divisions to avoid market conflicts and disruption amid geopolitical tensions between the US and China.
The Peak They are struggling to raise the amount.
The rationale for Peak XV stems from growing concerns about the frothy performance of India's public markets and the lack of venture-scale opportunities in the near term. The company said in the letter that it remains bullish on the region and that the changes it is making will allow it to better work with its supporters.
Macquarie analysts recently pointed out that India's price-to-earnings ratio is around 21 times, compared to 10 times for emerging markets overall, 14.5 times for global markets, 17 times for the US and 8 times for China. . India has seen more tech initial public offerings this year than the US
Peak XV's fund size far exceeds that of its competitors in India. Lightspeed's latest India-focused fund is $500 million, and Accel closed its latest India fund at $650 million. Matrix, Elevation, and Nexus raised $550 million, $670 million, and $700 million, respectively, in their latest funds.
Peak XV started its journey in India over a decade ago. The company disclosed in the letter that it has made $10 billion in realized profits and, among other things, unrealized profits. Since its separation from Sequoia last year, the company has made about $1.2 billion in exits, TechCrunch reported last week.
Peak XV's dominant position in the region has attracted both praise and criticism. The company's Surge program, which offers favorable terms and extensive resources to early-stage startups, has become a coveted launching pad for young startups in India and Southeast Asia, somewhat overshadowing the appeal of Y Combinator's offerings. are.
Earlier this year, the organization also unveiled plans for a permanent fund supported by its own partners.
Since its inception, Peak XV has managed $9 billion in assets, with an additional $2 billion still under management. Its portfolio spans more than 400 companies, including more than 50 unicorns and approximately 40 companies with annual revenues of more than $100 million.
Since 2020, 15 of its portfolio companies have been listed on public markets, more than any other India-focused venture fund.