Lightspeed Ventures is focusing its strategy in India on artificial intelligence (AI), aiming to raise $250 million for a new early-stage fund. The firm believes that AI will drive the next wave of startups in India, one of the largest markets globally.
The Silicon Valley venture firm has previously invested in AI companies such as Anthropic, xAI, and Databricks. In India, it has supported Sarvam AI, a leading developer of large language models, which has been selected by the Indian government to assist in developing sovereign AI models.
The new fund, named Lightspeed India Partners V, will be half the size of its predecessor fund, which raised $500 million in 2022. According to a letter sent to investors on Thursday and reviewed by TechCrunch, Lightspeed has already secured commitments for 80% of its $250 million target.
In late April, Lightspeed disclosed the new fund in a U.S. regulatory filing, though the filing did not specify its target size. Reports from Indian media had indicated that the firm was looking to raise between $300 million and $350 million for the fund.
Lightspeed plans to start investing from the new fund within two months, with an investment period of approximately two and a half years, as stated in the letter. Until then, it will continue to make final investments from the existing fund.
For the first time, Lightspeed is aligning its India funds with the same fundraising cycle as its global funds, according to the investor letter. This change aims to integrate its regional business, established nearly two decades ago, with the rest of the firm.
This strategic shift follows a similar move by rival firm Accel, which raised its latest $550 million India fund in August alongside new U.S. and Europe funds as part of a coordinated $3.5 billion fundraising effort.
The $250 million fund is designed to match Lightspeed's current investment pace and shorter investment period. The firm indicated that the smaller fund size allows for a greater focus on individual deals and enables it to raise its next fund sooner.
The new fund emphasizes a stronger focus on AI within Lightspeed’s early-stage investment strategy in the region. The investment thesis outlined in the letter suggests that AI will create more value in India than the internet did, with the fund seeking AI companies across India and Southeast Asia.
Despite India not yet producing a major frontier AI model developer on the global stage and attracting less investment in AI compared to the U.S. and China, investors see potential in India’s application layer, leveraging the country’s large pool of software developers and its long-standing history in software and technology services.
The new $250 million fund is a small portion of the capital available through Lightspeed’s global platform. The firm manages over $65 billion in assets globally and raised $9 billion across several new funds last December, marking its largest fundraising effort in history, which included a $980 million early-stage venture fund.
Lightspeed’s dedicated India and Southeast Asia funds represent only part of the capital the firm has deployed in the region. Those funds have invested approximately $900 million, while Lightspeed’s global funds have contributed an additional $1.6 billion to support companies within the regional portfolio, as detailed in the investor letter.
The decision to focus the newest regional fund entirely on AI signifies a more thematic investment approach for Lightspeed in a market where it has historically invested across various sectors. Its India portfolio includes businesses in quick commerce, consumer internet, software, and household services.
The same team that managed Lightspeed’s previous four India funds will oversee the new fund, according to the letter.