Plan to invest in climate, electric mobility in India: Lightspeed's Taneja

At a time when large investors have reduced their investments in India as the funding winter persists, venture capital firm Lightspeed is betting big on the country. It plans to invest in emergent sectors such as climate, electric mobility, deep tech, Web3 and cross-border commerce. The firm would also continue to invest in core themes such as consumer, fintech and software-as-a-service (SaaS).

“We believe in investing through cycles and in companies that are building for the future. We have core investment areas in SaaS, fintech, commerce and consumer,” said Rahul Taneja, Partner, Lightspeed, in an interview. “In addition, we have made our initial investments in emergent sectors such as climate including electric mobility, blockchain, infrastructure and deep tech.”

Last year in July, Lightspeed which has backed unicorns such as Byju’s, udaan, Sharechat, Innovacer and Razorpay raised $500 million for its fourth early-stage fund in India.

Taneja said that as the supply chain related to logistics, electronics, apparel and healthcare got disrupted due to the Covid-19 pandemic, it has opened up a lot of opportunities. One of the big agendas for the world is to de-risk supply chains to reduce dependence on China. “We believe India will be a big beneficiary of this,” said Taneja.

He said there are many many examples where global companies are adding India to their manufacturing portfolio. Though the country does not have very large-scale factories, unlike China, it has a vast number of small and medium plants. He said this presents an opportunity where one can work these facilities across different industries and enable them to export goods or drive cross-border commerce across the world.

“We believe there is a massive opportunity to drive cross-border commerce,” said Taneja. “In the last one and a half years, we made about five investments in this space across different categories, ranging from speciality chemicals to building materials and apparel.”

Last year in October, Lightspeed led a $20 million series A funding in GlobalFair, a technology-first business-to-business building material supplier. The Gurugram-based firm was founded by IIT alumni Shaily Garg and Ashish Chandra in 2020. It has operations in about 36 of the 50 states in the USA, where it supplies materials to small and big projects. It also supplies building materials for projects across India and Vietnam.

Lightspeed has also backed manufacturing unicorn Zetwerk. At a time when companies are considering the China Plus One strategy, it is turning out to be a big opportunity for Zetwerk, which is a global source of manufacturing across industrial and consumer products. The firm has more than 2,000 customers across North America, Asia-Pacific and the Middle East. It has a network of more than 10,000 manufacturing partners worldwide.

The other big theme that is emerging for Lightspeed is the climate which includes electric mobility. Last year in August, Lightspeed led a series A funding round in electric vehicles charging startup Exponent Energy. The Bengaluru-based firm has built a proprietary charger and battery 'e-pump' and 'e-pack' that together can provide rapid charging of 100 per cent in 15 minutes.

“We want to be in businesses where technology enables (organisations) to ramp up faster, be more efficient and solve customer problems,” said Taneja.

Lightspeed is investing in India at a time when the technology and startup industry faces a funding winter, valuations are under stress and companies are laying off employees.

“On the early stage investing front, the market continues to be vibrant,” said Taneja. He said while the number of deals may not be similar to peak years, the important thing is founder quality continues to be solid.

The firm recently announced investments in fintech firm Aspire and edtech company Bluelearn and CommandK, which manages enterprise security.

“If anything, we've realized that in downturns only the founders with high conviction jump into the fray. We believe this is a great time to be in business with such founders,” said Taneja. “Given we have a strong consumption economy, and capital availability is not really a challenge for good companies, we believe the ecosystem will continue to flourish.”

As many as 58 per cent of founders of Indian startups expect fund-raising to become tougher in 2023 and hiring muted, according to InnoVen’s ‘India Startup Outlook Report. Only 53 per cent of founders had a positive experience while trying to raise funds last year compared to 92 per cent in 2021.