General Catalyst, one of the largest U.S. venture capital firms, is currently engaged in discussions to acquire a venture fund focused on India. This acquisition is part of the firm’s ongoing efforts to establish a stronger presence in the rapidly expanding South Asian startup market. According to three sources familiar with the matter who spoke with
TechCrunch, the deal is still in progress and the target fund is believed to have assets under management (AUM) totaling less than $200 million. However, the sources emphasized that the details of this private deliberation are subject to change and therefore, requested to remain anonymous.
General Catalyst has already invested in approximately 18 startups in India, including prominent fintech company CRED, used car marketplace Spinny, and innovative healthtech company Orange Health. However, for more than a year, the venture firm has been actively seeking to significantly expand its presence in the country, according to several individuals familiar with the matter.
These sources shared that last year, General Catalyst engaged in discussions with several prominent figures in India in the hopes of finding a local partner. Additionally, the firm also explored the possibility of acquiring a fund specifically focused on India as a means of establishing a stronger foothold in the country.
These moves come as part of the firm’s plan to invest more than $500 million in India over the next three to four years, according to another source familiar with the matter. In addition to its expansion in India, General Catalyst also made significant headway in Europe last year by merging with La Famiglia, an investor in numerous early-stage startups, including AI company Mistral.
The Indian startup ecosystem is one of the largest in the world, having attracted heavyweight investors such as Sequoia, Lightspeed, Accel, Tiger Global, SoftBank, and Insight Partners over the past decade and a half. Other notable venture firms, including Coatue Management, QED, and Andreessen Horowitz, have also backed Indian startups in recent years as they strive to serve the incredibly promising internet market with over 700 million users.
However, investing in India has proven to be a uniquely challenging endeavor for many global venture firms. According to a partner at an India-based venture firm, while the country holds immense potential, it has yet to achieve the level of exits and returns found in more established markets such as the U.S. The investor cautioned that venture firms must come to terms with the fact that the timeframe for achieving substantial returns may be significantly longer in India.
Nevertheless, funds, including asset managers, are increasingly turning their focus towards India, whose GDP of $4 trillion is expected to double by the end of the decade, according to Morgan Stanley. Well-known companies such as Invesco, T. Rowe Price, BlackRock, Fidelity, and UBS are now investing in Indian startups through their mutual funds.
“Rather than solely considering the average GDP, we should also take into account the projected number of Indian households making between $50,000 to $75,000 per year by 2030. Our greatest asset is our developers,” stated Anu Hariharan, founder of venture capital firm Avra and previous head of YC Continuity, in a recent post on X.
“India is projected to have around 15 million developers by the next decade, making between $50,000 to $75,000 per year. For each developer household, we can expect a corresponding household in the financial services and healthcare industries earning similar incomes. This equates to approximately 45 million households earning more than $60,000 a year by 2030. In comparison, the current population of the United Kingdom comprises 28 million households earning $45,000 annually.”
By acquiring an India-focused venture fund, General Catalyst intends to tap into India’s thriving technology landscape and be better equipped to capitalize on the tremendous potential for growth and returns in this promising market. The firm’s expansion in India and Europe, along with the increased interest from global funds and asset managers, further solidifies India’s position as a major player in the global startup ecosystem.
