Lightspeed Aims for $250M to Launch New Fund in India, Centered on Early-Stage AI Innovations

Lightspeed is refining its approach in India with a focus on AI, aiming to raise $250 million for a new early-stage fund, as the venture capital firm anticipates that this technology will spur the next generation of startups in one of the largest markets globally.

The Silicon Valley-based venture firm has already invested in prominent AI companies such as Anthropic, xAI, and Databricks. In India, it has supported Sarvam AI, a leading developer of large language models and a startup chosen by the Indian government to create sovereign AI models.

The planned fund, Lightspeed India Partners V, will be $250 million, which is half the size of its previous $500 million fund raised in 2022. The firm has reportedly secured 80% of its funding goal based on a letter sent to investors that was reviewed.

Earlier this year, Lightspeed revealed the upcoming fund in a filing, though it didn’t disclose the target amount at the time. Reports had suggested that the firm was aiming to raise between $300 million and $350 million.

Investments from the new fund are expected to commence within two months, with an investment period of approximately two and a half years outlined in the investor letter. In the meantime, Lightspeed will continue to make final investments from its existing fund.

A spokesperson for Lightspeed declined to offer any statements regarding the new fund.

With this new fund, Lightspeed is aligning its India funds with the same fundraising schedule as its global funds for the first time. This adjustment aims to synchronize its regional operations, which were established nearly 20 years ago, with the overall strategy of the firm.

This development follows a similar strategy adopted by rival firm Accel, which recently raised $550 million for its latest India fund alongside new funds for the U.S. and Europe, as part of a coordinated $3.5 billion fundraising venture—marking the first instance that Accel has raised four funds simultaneously.

The $250 million fund is structured to match Lightspeed’s current investment pace and shorter investment period. The firm indicated that a smaller fund size allows for more concentrated deal focus, facilitating quicker future fundraising.

The new fund highlights a more concentrated emphasis on AI within Lightspeed’s early-stage investment strategy in the region. The investment approach suggested in the letter predicts that AI will generate more value in India than the internet did, as the fund looks to invest in AI companies throughout India and Southeast Asia.

India has not yet produced a leading AI model developer on the world stage and has received significantly less AI investment compared to the U.S. and China. However, more investors are recognizing the potential for India in the application layer due to the country’s extensive pool of software developers and its long-standing reputation as a technology hub.

The new $250 million fund is relatively small compared to the overall capital accessible through Lightspeed’s global platform. The firm manages over $65 billion in assets globally and raised $9 billion across various new funds last December, marking its largest fundraising success to date, which included a $980 million early-stage venture fund.

Lightspeed’s dedicated funds for India and Southeast Asia represent only a portion of the total capital the firm has deployed in this region. These funds have invested around $900 million, while Lightspeed’s broader global funds have committed an additional $1.6 billion to support companies in the regional portfolio.

The choice to focus the newest regional fund exclusively on AI signifies a more pronounced thematic direction for Lightspeed in a landscape where its investments have previously covered diverse sectors. Its India investments include sectors like quick commerce, consumer internet, software, and household services.

Among Lightspeed’s notable investments in India are quick-commerce company Zepto, audio streaming service Pocket FM, household assistance startup Snabbit, rooftop solar enterprise SolarSquare, and various enterprise software firms.

The same team that managed Lightspeed’s previous four India funds will oversee this new fund, as outlined in the communication to investors.