A reason for cheer—India’s ‘own Sequoia’

own Sequoia

By Ruben Banerjee

The rebranding of Sequoia India as Peak XV Partners following the split with its parent venture capital firm is a very sound reason for Indian startups to rejoice. A wholly independent Indian entity with Indian interests predominantly in mind will boost the Indian startup ecosystem that has already been accelerating over the past few years.

Among everything else, the Indian entity would have greater flexibility and ability in operating in the country after being freed of the constraints that otherwise comes with being part of a global firm. It would also free the Indian startups from the nagging suspicion that they may have nursed over their trade secrets being shared with their competitors, since the global VCs also funded many of the competitors in US, Europe and China.

The excitement over the Sequoia split in India is therefore not misplaced. In fact, as some prominent founders and venture capitalists have rightly pointed out, the development flags the ‘rise of a global Indian tech investor’.

Already growing at a frenetic pace, the Indian startup ecosystem will get a well-deserved leg-up from the split. Adequately aided by supportive policies that seek to empower entrepreneurship, promote innovation, and create a conducive environment in the country, startups in India are looking at an incredibly promising and bright future. There has already been an explosion of Unicorns in India.

By last count, India has 108 unicorns with a total valuation that tops $340 billion. The more glamorous unicorns apart, India also serves as the nursery of the world’s third largest startup ecosystem. It currently boasts of some 99,000 of them spread over some 670 districts of this vast country.

Given that Indian startups enjoy such extensive deep roots, the emergence of an Indian tech investor of a truly global scale augurs well for the domestic startup universe. It would help in creating wealth by pumping in capital. It would also significantly help in the balance of payments for the country, as a significant part of the capital earlier came from outside India.

There are many reasons that have set the stage for the Indian startup ecosystem to flourish further. They range from India’s vast pool of talented and skilled workforce to its demographic advantage with more than 50% of the population being below the age of 25. More importantly, India has also come to be a preferred place for investments.

Propelled by geo-political reasons, the West is seeking to shy away from China. It allows India to acquire an extra edge as an investment destination. There is already talk that the US based Limited Partners who have so far been pumping money into China are likely to redirect it to India, picking those who have a good track record and have delivered good exits.

Resolving irritants for potential investee startups—such as the nagging suspicion of their trade secrets being leaked to competitors in US and China—can only add to the attraction for India. It would expectedly set the stage for other large VC funds to follow suit. Do not be surprised if more of them hive off their Indian operations with independent funds for better addressing the needs of the Indian startups. Many of them are likely to go solo while being of a global scale. And their dedicated Indian funds will hasten the emergence of a larger and more vibrant startup ecosystem.

India stands to gain immensely if lessons from the recent split are meaningfully interpreted and put to use gainfully. For, it is very likely that the dedicated Indian funds of Indian entities would spur the emergence of domestic startups that in the near future could grow to become competitors to formidable foreign startups. There is no reason therefore to lament the Sequoia split. Smile instead, imagining the encouraging prospects.

The writer is director, Centre for Digital Economy Policy Research

This article first appeared in Financial Express, https://www.financialexpress.com/opinion/a-reason-for-cheerindias-own-sequoia/3167683/