On June 6, Peak XV Partners—formerly known as Sequoia India & Southeast Asia—was born after its parent entity, Sequoia Capital, split into three.
With $9.2 billion raised across 13 funds and investments in over 400 companies and $4.5 billion in exits through M&As and IPOs, Sequoia India & Southeast Asia has had an impressive track record in the region. Some of its portfolio companies—Trell, Zilingo, and BharatPe—however, have come under the scanner for financial irregularities.
Last year, Sequoia Capital India called for some guard rails and governance in the startup ecosystem.
Taking charge of Peak XV Partners is Shailendra Singh, who has been with Sequoia for 17 years. He has led a prominent role in the firm making investments into startups such as Zomato, Freshworks, BYJU’S, and Ola.
Peak XV Partners is sitting on $2.5 billion dry powder and Singh thinks the split from its parent will make the India and SEA unit more agile.
In an interview with YourStory, Singh said that although the investment climate has changed for the startup ecosystem due to the ongoing funding winter, “the best companies are founded and the best investments are made in downturns…tough funding cycles are a gift for investors.”
Edited excerpts from the email interview:
YourStory [YS]: What changes can we expect now that Peak XV Partners is charting out on an independent path?
Shailendra Singh [SS]: So what’s changed is that we are a completely independent business with a new brand name that now has this unbounded global opportunity. With this new structure, we are eliminating global portfolio conflict. While we try to avoid portfolio conflicts, we are seeing companies emerge from every region with global ambitions.
As a result, companies backed by different Sequoia entities will eventually compete with one another, which creates challenges for founders and their teams.
As Peak XV Partners, we will be a lot more agile in our investment process. Like a startup, it is critical for an investment partnership to move quickly and efficiently while complying with applicable rules and regulations. Operating as an independent brand will enable this.
For example, by eliminating centralised legal and compliance functions, we can make decisions on the basis of our nuanced understanding of local regulations, rather than be constrained by regulations that may have no bearing in our region.
Going forward we will be able to partner with founders building world-class, cross-border, India/SEA to the world companies across tech sectors like AI, dev tools, SaaS, etc. without limitations, without the burden of potential portfolio conflicts. We are very excited about this opportunity.
YS: The startup investment environment has considerably changed since mid of 2022. How does Peak XV Partners see the present situation and opportunities ahead?
SS: The best companies are founded and the best investments are made in downturns. So this is a very important time for us to deeply engage with the ecosystem and potential founders who we can partner with. We are very actively looking to partner with ambitious founders and that is not going to change.
Our seed and venture pipeline is pretty solid. Our team is also actively looking to partner with growth stage companies.
Tough funding cycles are a gift for investors, it’s not a bad thing. We are excited to have dry powder for this cycle.
YS: What can the startup founders from India now look forward to from Peak XV Partners?
SS: Great question. One of our strengths over the last 15 years has been that we’ve built a lot of capabilities to support founders. We have nine full-time team members as part of human capital. They help founders build high-quality leadership teams. Similarly, we have a strong team doing strategic development which helps founders raise late-stage rounds of financing, get IPO-ready, do M&As so on.
We have other teams including public policy, finance, brand, etc but our capabilities are currently limited to our region.
One of the things we will do differently is we will build capabilities to help founders in other regions especially, in the US as a first priority. So if you are a founder building a global business and you want to build from India for the world, we will hopefully have direct capabilities – talent recruitment, ability to help introduce to customers, help go to market, etc. It will take us a few quarters to make this possible but that’s something founders can look forward to.
YS: Will Peak XV Partners now look at tapping into the capital resources from the Indian domestic market in the form of LPs?
SS: We are very well capitalised with $2.5 billion of uninvested capital. There is no need for us to take decisions on this for the next 1 or 2 years.
YS: Given this separation from the parent company, will Peak XV Partners continue to look at cross-border opportunities for your portfolio of companies especially in the US market?
SS: We have more freedom to pursue cross border companies, whether founders that are based in India or US, we can pursue both sides. The freedom to pursue more such cross-border companies expands the profit pool of sectors and investments we can go after.
