Andreessen Horowitz plans $500 million investment in Indian startups

Andreessen Horowitz, who made his maiden India investment last year, is looking to get aggressive in the world’s second largest internet market.

The Silicon Valley-based venture capital firm has earmarked about $500 million to back Indian startups, a source familiar with the matter told TechCrunch.

The firm, which led a funding round in the Bengaluru-based cryptocurrency exchange CoinSwitch Kuber last year, is also looking to hire for several investment roles in the country, people familiar with the matter said.

A number of partners at the firm including Seema Amble and Sumeet Singh have engaged with several Indian startups in recent months, people familiar with the matter said, requesting anonymity as the matter is private.

The firm — which in January said it had raised $9 billion for its venture, growth and bio funds — is exploring investment in an Indian startup that operates an opinion sharing platform at a valuation of about $250 million, one person said. It has also engaged with a Bengaluru-headquartered early-stage fintech, another person said.

We are “starting to see them look more seriously,” said an investor at a top tier fund in India. He declined to be named.

If the firm, which is colloquially called a16z, goes ahead with the plan, it would be the latest high-profile investor to become actively involved in India, home of 100 unicorns and where tech giants Google, Facebook and Amazon have collectively deployed at least $20 billion over the past decade.

Andreessen Horowitz did not respond to a request for comment Friday.

The firm has been exploring markets like India for years and has been open about the complexity of entering new regions.

In a talk at Stanford Graduate School of Business six years ago, a16z co-founder and general partner Marc Andreessen (pictured above) said it was “extremely tempting” to back startups in emerging markets. But it was also challenging for a venture fund to expand to more countries, he explained. Venture capital is a “very hands-on process of understanding the people you’re working with for both evaluating the company and work with the company.”

“If it continues to be a hands-on business like that then there is the problem of geographic remoteness, which is if I’m not present in another geography, do I really know those people to make the decisions. So what a bunch of firms have been trying to do is staff local teams. But then there’s the fundamental problem that if the local team is really good, then they can easily leave and run their own firms. If they are bad, they stay working for me…which has its own issues.”

With valuations getting a broader correction in the private market (as well as public), now would be a good time for the firm to chase deals in the country.

Scores of firms, including Bessemer Venture Partners, General Catalyst, Insight Partners, B Capital, Ribbit Capital, Dragoneer, D1 and James Murdoch’s Bodhi Tree (who previously invested in India through Lupa) have increased the pace of their investments in the world’s second most populous nation in the past two years.

Several of their peers/rivals, including Sequoia, Lightspeed and Accel that each have operated in India for over a decade have either raised new country-specific funds in recent months or are in the process of raising one.

Lightspeed India Venture Partners is looking to raise over $500 million for its fourth India fund, TechCrunch reported last week.

SoftBank, Alpha Wave Global and Tiger Global have also notably doubled down on India in recent quarters. SoftBank alone invested more than $3 billion in Indian startups last year and plans to invest up to $10 billion this year, it said. Tiger Global has helped mint nearly two dozen unicorns in India in the past 18 months.

On the web3 front, scores of investors, including Coinbase Ventures, Sino Global, Hashed and FTX Ventures, have engaged with multiple startups in the country in recent weeks, according to people familiar with the matter.

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