Lightspeed Targets $250M India Fund With AI in Focus

Lightspeed is preparing to raise $250 million for a new India-focused venture fund, with artificial intelligence at the center of its early-stage investment strategy.

The Silicon Valley venture capital firm plans to use its latest India vehicle to back startups at an early stage, particularly companies building AI products across India and Southeast Asia. The move highlights Lightspeed’s growing focus on AI as it looks for the next generation of technology companies in one of the world’s largest startup markets.

The new fund, called Lightspeed India Partners V, will be significantly smaller than the firm’s previous India fund. Lightspeed raised $500 million for its predecessor in 2022, while the new vehicle has a target of $250 million.

According to a letter sent to investors on Thursday and seen by TechCrunch, Lightspeed has already secured commitments for around 80% of the new fund’s target.

The firm first disclosed the new fund in a U.S. regulatory filing in late April. However, that filing did not reveal how much Lightspeed planned to raise. Earlier reports from Indian media had suggested that the firm was targeting between $300 million and $350 million.

Lightspeed expects to begin investing from the new fund within the next two months. The fund has been designed around an investment period of roughly two and a half years. Until the new vehicle begins investing, the firm will continue making its final investments through its existing India fund.

A Lightspeed spokesperson declined to comment.

AI Takes Center Stage

The new fund represents a notable shift in Lightspeed’s India strategy. While the firm has historically invested across a broad range of sectors in the country, its latest vehicle is built around AI.

According to the investor letter, Lightspeed’s investment thesis is based on the expectation that AI could create more value in India than the internet did. The firm plans to search for AI opportunities across both India and Southeast Asia.

Lightspeed already has significant exposure to the global AI sector. Its portfolio includes AI companies such as Anthropic, xAI, and Databricks.

In India, the firm has backed Sarvam AI, one of the country’s leading large language model developers. Sarvam AI was also selected by the Indian government to help develop sovereign AI models.

India has not yet produced a major frontier AI model developer with a global position and continues to receive far less AI investment than the U.S. and China. Still, investors are increasingly looking toward the application side of AI in India.

The country has a large pool of software developers and a long history as a major center for software and technology services, factors that could support the development of AI applications.

Smaller Fund, Faster Cycle

Lightspeed says the $250 million fund is sized around the pace at which it is currently investing. The shorter investment period also played a role in determining the fund’s size.

The firm told investors that the smaller vehicle allows it to concentrate on individual investments rather than focusing primarily on increasing the size of the fund. It also gives Lightspeed the option to return to the market and raise its next fund sooner.

Starting with the new vehicle, Lightspeed is also changing how it manages its India fundraising cycle. For the first time, its India funds will follow the same fundraising cycle as its global funds.

That brings the India operation, which Lightspeed established nearly two decades ago, more closely into line with the broader firm.

The move comes after rival venture firm Accel made a similar change. In August, Accel raised its latest $550 million India fund alongside new U.S. and Europe funds and a global growth vehicle as part of a coordinated $3.5 billion fundraising effort. It was the first time Accel had raised all four funds at the same time.

Lightspeed’s Bigger India Portfolio

The new $250 million vehicle represents only a small portion of Lightspeed’s overall global capital. The firm manages more than $65 billion in assets globally and raised $9 billion across several new funds last December, marking the largest fundraising effort in its history. That total included a $980 million early-stage venture fund.

Lightspeed’s dedicated India and Southeast Asia funds have deployed roughly $900 million in the region. Its global funds have invested an additional $1.6 billion in companies from the regional portfolio, according to the investor letter.

The firm’s India investments have covered a wide range of industries. Its portfolio includes quick-commerce company Zepto, audio platform Pocket FM, house-help startup Snabbit, rooftop solar company SolarSquare, as well as several enterprise software businesses.

That broad sector approach now appears to be narrowing around AI for its latest early-stage fund.

Despite the new AI-focused strategy, the team managing the fund will remain familiar. The same team that managed Lightspeed’s previous four India funds will lead the new $250 million vehicle.

With most of the fundraising target already secured, Lightspeed is expected to begin deploying capital from the new fund within the next two months, putting AI startups at the center of its next phase of investment in India and Southeast Asia.

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