General Catalyst, a Silicon Valley venture capital group, is expanding its presence in India by joining forces with a local venture firm and allocating more than $500 million in investments in the world’s most populous country.
The US venture capital group is merging with Venture Highway, an India-based firm whose investments include social commerce startup Meesho and B2B industrial marketplace Moglix. TechCrunch reported on the two venture firms’ talks to reach a deal in January.
The deal will see the combined entity plan a new multi-stage investment strategy for General Catalyst in India, extending early to growth stage screenings across industries, Venture Highway founder Neeraj Arora and GP Priya Mohan told TechCrunch in a joint interview.
Venture Highway, which raised $78.6 million for its second fund in 2020, has traditionally focused on early-stage investments. As part of the General Catalyst team, she will also expand her remit to include startup incubation, a relatively uncharted area in the country. “Our vision is to be part of building a number of companies that will not only go public, but will also help jumpstart the economy,” Mohan said.
General Catalyst plans to invest between $500 million to $1 billion in India over the next three years, said Arora, who previously served as chief business officer at WhatsApp and was instrumental in selling the instant messaging app to Meta.
The new allocation places General Catalyst among the largest venture capital firms in India, alongside the likes of Lightspeed, Accel, Elevation and Nexus, which each raised between $500 million and $700 million in their recent funds. Peak XV Partners (formerly Sequoia India and Southeast Asia) leads the pack with $2 billion to deploy in the country.
General Catalyst has not acquired Venture Highway’s previous startup portfolio holdings, but will consider them “a significant part of the GC portfolio going forward,” General Catalyst CEO Taneja said in an interview with TechCrunch.
“We want to support them the same way we support any of our companies in India or anywhere else in the world,” he said.
The two companies began exploring ways to collaborate several years ago, but felt the timing was right now. “We could have gone out and raised more capital. That was one of the options on the table. But thinking from first principles, when we think about the opportunity in India today, and what our ambitions are, it made sense for us to join hands with General Catalyst,” he said. Aurora.
India, which saw GDP growth of 8.2% in the fiscal year ending in March, has cemented itself as the world’s fastest-growing major economy over the past decade. Favorable policy changes have stimulated growth in various industries and attracted some of the world’s largest investors.
SoftBank, Tiger Global, Peak But “returns on capital in India have historically been poor,” Scott Schleifer of Tiger Global said at a virtual gathering with Indian business leaders last year.
India is not new territory for General Catalyst, which has been investing in the country for more than a decade. Its portfolio includes fintech unicorn CRED, used car marketplace Spinny, and health tech startup Orange Health. The company recently co-led a financing round with India’s Tata Group in Alsym Energy, a company developing the next generation of non-flammable rechargeable batteries.
Taneja expects more partnerships with Indian companies in the future. “I believe many conglomerates in India are very entrepreneurial and will play an important role in the growth opportunities in India,” he said. “Some of the opportunities we want to invest in or help build in India, it might make sense to collaborate with them on a more radical basis.”
He added: “We have a deep belief that when you transform industries, no matter where you are in the world, you have to collaborate with industry leaders. We are doing that in healthcare here.” [in the U.S.] And with a lot of healthcare systems, we’re actively working with different governments when it comes to policies and issues and things like artificial intelligence.
Thursday’s announcement follows a similar move by General Catalyst in Europe last year, when the company revealed plans to merge with Berlin-based investment firm La Famiglia. Taneja declined to comment on whether his company would seek to replicate this model in other markets.