General Catalyst, a Silicon Valley-based enterprise capital group, is expanding its presence in India by joining forces with local enterprise capital firm Venture Highway and committing between $500 million and $1 billion to investments in the country.
Venture Highway’s investments include social commerce startup Meesho and B2B industrial marketplace Moglix. In January, TechCrunch reported that the two enterprise capital firms were discussing cooperation.
As a part of the transaction, the combined entity will develop a multi-stage investment strategy for General Catalyst in India, spanning early-stage and growth-stage startups across a number of industries, Venture Highway founder Neeraj Arora and General Catalyst’s Priya Mohan told TechCrunch in an interview.
Venture Highway, which raised $78.6 million for its second fund in 2020, has traditionally focused on early-stage investments. As a part of the General Catalyst team, he’ll expand his competences to include startup incubation. “Our vision is to contribute to building a pipeline of companies that will not only go public but also have a significant impact on the economy,” Mohan said.
General Catalyst, which manages greater than $25 billion in assets, plans to invest between $500 million and $1 billion in India over the next three years, said Arora, who previously served as chief business officer at WhatsApp and played a key role in the quick messaging app’s sales Meta company.
The deal makes General Catalyst one of the largest enterprise capital firms in India, alongside the likes of Lightspeed, Accel, Elevation and Nexus, which each raised between $500 million and $700 million in their latest funding. Peak XV Partners (formerly Sequoia India and Southeast Asia) is leading the way, with a $2 billion fund dedicated to investments in the country.
General Catalyst is not acquiring the Venture Highway portfolio, but will consider it “largely part of the GC portfolio going forward,” Hemant Taneja, CEO of General Catalyst, told TechCrunch.
“We want to support [these portfolio companies] the same way we support each of our businesses in India or anywhere else in the world,” he said.
The two corporations began looking for ways to collaborate several years ago, but now is the right time, Arora said. “We could have gone out and raised more capital. This was one of the options on the table. But thinking from the ground up, when we think about the opportunities that India has today and our ambitions, it made sense for us to join hands with General Catalyst,” he said.
Over the last decade, India has turn out to be one of the fastest growing major economies in the world, with the GDP rate reaching 8.2% in the last financial 12 months. Favorable policy changes have spurred growth across industries, attracting some of the world’s largest investors.
SoftBank, Tiger Global, Peak XV, Lightspeed, Accel and others have invested around $100 billion in Indian tech startups over the last five years and are starting to see some returns as many of those corporations go public. However, “returns on capital in India have been poor in the past,” Tiger Global’s Scott Shleifer said at a virtual meeting with Indian entrepreneurs last 12 months.
India is not latest territory for General Catalyst, which has been investing in the country for over a decade. Its portfolio includes fintech unicorn CRED, used automotive marketplace Spinny and health tech startup Orange Health. The company recently co-led a financing round with Indian conglomerate Tata, which was raised by Alsym Energy, a company developing non-flammable batteries.
Taneja expects more partnerships with Indian conglomerates in the future. “I believe many conglomerates in India are very entrepreneurial and will play a significant role in providing growth opportunities for India,” he said. “For some of the opportunities we want to invest in or help build in India, radical collaboration with them might make sense.”
“When you change industries, no matter where you are, you need to work with industry leaders,” Taneja added. “We do it here in health care [in the U.S.] with multiple healthcare systems; We actively engage with various governments when it comes to policy and issues such as artificial intelligence.”
Thursday’s announcement follows a similar move by General Catalyst in Europe last 12 months, when the company revealed plans to merge with Berlin-based enterprise capital firm La Famiglia. Taneja declined to comment on whether his company would seek to replicate the model in other markets. General Catalyst is in the advanced stages of closing its $6 billion fund, FT reported in April.