Sequoia Capital raises $195M in second seed fund to back entrepreneurs in India and Southeast Asia

Sequoia Capital India on Thursday announced the success of its second seed fund at $195 million.

According to the company, the second seed fund will be committed to backing talented entrepreneurs across India and Southeast Asia. The first seed fund was raised in 2019 at $200 million.

Through its Surge program, Sequoia provides seed capital of up to $2 million to selected startups to grow their business. The company also provides these companies with community access.

Managing Director at Sequoia Capital Rajan Anandan said quite many startups in India are expected to launch their initial public offering this year, although 2020 was the expected year. He described last year as a “tale of two halves”, with the first half being ravaged by the coronavirus pandemic and the second half, a recovery process to pre-Covid levels.

“In the second half, we saw very, very strong recovery – driven by both the acceleration of consumer and business adoption of digital technologies as well as companies getting much more prudent with their cost structures,” Anandan said.

He is positive that 2021 is going to be a better year, compared to 2020, especially for Indian startups, as “sizeable” and “significant” IPOs begin to spring up in the startup “ecosystem.”

India currently has 39 startups, valued at more than $1 billion. These startups are commonly referred to as unicorns, according to Venture Intelligence which tracks private companies and valuations.

Sequoia Capital partner Alfred Lin in a phone interview told Fortune that the company is out on a seed-hunt, to make deals with promising startups.

“I wanted to get the word out there that we do make seed investments and that is the primary thing. It’s easy to look at [our recent] large deals and say, ‘Oh, Sequoia is doing these larger deals.’ But let’s not forget, we’ve always been in the seed business,” Lin said.

Although Indian startups suffered a great deal last year, Anandan says the industry has emerged stronger and better, ready to take on the economy. He says more focus is placed on cost structure and “extraordinary innovation”, covering a wide variety of sectors including technology, education, digital health, and financial technology.

The rise of new startups over the decade can be linked to the availability of risk capital, funds invested in high-risk projects for higher returns. They account for nearly 10% of new companies created in India each year, based on a report by Swiss investment bank Credit Suisse.

“The surge in private equity flows for Indian firms has been such that private market fund-raising has exceeded public market transactions in each year of the last decade,” said Neelkanth Mishra, co-head of Asia Pacific strategy and India equity strategist at Credit Suisse.

Anandan further explained that startups in India are presented with two opportunities: India’s growing number of internet users and the leverage of “building for the world.