Accel Plans to Invest in 25 Indian Startups Amidst Growing Investor Confidence

• ByStartupStory     |    March 26, 2024

Accel, the renowned early-stage venture capital powerhouse, is gearing up to inject capital into 25 promising Indian startups throughout the year. Moreover, the firm is contemplating the launch of an India-focused fund within the next couple of years, as disclosed by a senior executive.

According to data sourced from Tracxn, a market intelligence firm, Accel has significantly ramped up its investment activities in recent years. In 2023, the firm made 17 strategic investments, following an impressive 51 investments in 2022.

Prashanth Prakash, Partner at Accel, revealed, “We look at (launching) a fund every three to four years. We still have a lot of dry powder in our current fund and expect to invest in at least 15-25 companies this year.” Prakash highlighted the firm’s strategy, stating that the next fund will be launched once all the resources from the current fund are fully deployed.

Accel, with its vast experience and keen eye for disruptive ventures, boasts a portfolio studded with unicorns in the Indian startup landscape. Notable investments include industry giants like Flipkart, Freshworks, Swiggy, and Spinny, among others.

Speaking on investment trends, Prakash emphasized the significance of sectors such as agritech, B2B, manufacturing, AI, SaaS, and climate tech in the upcoming investment cycle. He remarked, “Sentiment among foreign investors towards the Indian market has shifted a lot this year…The stability of our policy regime is a bright spot globally.”

Amidst growing investor caution triggered by recent cases of corporate misgovernance in prominent startups like Paytm and Byju’s, Accel remains vigilant, dedicating more time to due diligence. Prakash noted the extended timeframe for deal closures, signaling heightened scrutiny in the investment process.

Despite a dip in startup funding in 2023, attributed to global macro headwinds and increased scrutiny post-corporate governance lapses, optimism persists in India’s startup ecosystem. Prakash highlighted the recalibration underway post the record-breaking funding of $42 billion in 2021, foreseeing startups to raise between $10-12 billion this year.

Moreover, with foreign capital retreating, domestic investors are seizing newfound opportunities. Prakash noted the shift, stating, “Since foreign capital shied away from India for almost 18 months, big opportunities opened up for Indian investors.”

In a reflection of this evolving landscape, many Indian funds are now venturing into later-stage investments, deviating from their traditional focus on seed and early-stage deals.

Accel’s enhanced enthusiasm for the Indian market underscores the resilience and potential of the country’s startup ecosystem amidst global uncertainties. As the investment landscape evolves, Accel stands poised to fuel innovation and growth in India’s dynamic entrepreneurial landscape.

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