Accel intends to fund 25 Indian startups amidst increasing investor trust.

Accel, a prominent early-stage venture capital firm, is preparing to invest in 25 promising Indian startups over the course of the year. Additionally, a senior executive revealed that the firm is considering launching an India-focused fund within the next few years.

Based on data from Tricin, an intelligence firm, Accel has significantly increased its investment activities in recent years. In 2023, the firm made 17 strategic investments, following an impressive 51 investments in 2022.

Prashanth Prakash, a Partner at Accel, shared, “We typically consider launching a fund every three to four years. Currently, we still have ample capital available in our current fund and anticipate investing in around 15-25 companies this year.” Prakash outlined the firm's strategy, indicating that the next fund will be initiated once all resources from the current fund are utilized.

With its extensive experience and focus on disruptive ventures, Accel boasts a portfolio that includes unicorns in the Indian startup scene such as Flipkart, Fresh works, Swingy, and Spiny.

Discussing investment trends, Prakash highlighted the importance of sorest like aggrotech, B2B, manufacturing, AI, SaaS, and climate tech in the upcoming investment cycle. He noted, “Foreign investors have shown increased interest in the Indian market this year... The stability of our policy framework is a positive factor globally.”

Despite recent cases of corporate mis governance in leading startups like Paytm and Byju’s causing investor caution, Accel remains vigilant, dedicating more time to due diligence. Prakash mentioned the extended timeframe for deal closures, indicating heightened scrutiny in the investment process.

Although there was a decrease in startup funding in 2023 due to global macroeconomic challenges and increased scrutiny after corporate governance issues, optimism prevails in India’s startup ecosystem. Prakash highlighted the adjustment following the record-breaking $42 billion funding in 2021, predicting startups to raise between $10-12 billion this year.

Furthermore, with foreign capital retracting, domestic investors are seizing opportunities. Prakash noted this shift, saying, “As foreign capital withdrew from India for about 18 months, significant opportunities opened up for Indian investors.”

Reflecting this changing landscape, many Indian funds are now venturing into later-stage investments, moving away from their traditional focus on seed and early-stage deals.

Accel’s increased enthusiasm for the Indian market underscores the resilience and potential of the country’s startup ecosystem amid global uncertainties. As the investment landscape evolves, Accel is poised to drive innovation and growth in India’s dynamic entrepreneurial landscape.