The move is part of the venture capital (VC) firm’s broader strategy to deepen its network and identify early trends on artificial intelligence (AI) where the US is the market leader, the person cited above said.
To be sure, Peak XV (pronounced Peak 15) has also made direct investments in AI-related companies in the US market in the past two years since it separated with Sequoia Capital. Recent American investments include Supabase (US-Singapore), Atomicwork (US), Hightouch (US), Luminai (US), Nirmata (US), RapidCanvas (US), among others.
However, the person cited above said that building fund relationships will allow Peak XV to be ahead of the curve on new AI trends and can potentially lead to new introductions with the founders of upcoming firms where the firm might be able to invest in.
Peak XV is also a limited partner (LP) in former executive Piyush Gupta’s fund launched last November, and expects to be an investor in more funds launched by other former company executives, the person added.
Separately, the firm is in early talks to raise up to $1.4 billion in a new India-SEA (Southeast Asia) fund, its first since the split with its parent. The fund is likely to be raised by end of the current financial year, people with knowledge of the development said.
Why invest in funds
Making fund investments is a tried and tested way for new VC and private equity (PE) firms to enter a new market. When global investors first started investing in India, they made several LP investments in Indian fund managers to first understand the market, before they started making direct investments.
Partners at Peak have been investing since 2006 and had access to the US market when they were part of Sequoia Capital. However, this access ended in June 2023, when Sequoia split into three globally. The India and South East Asia team became Peak XV Partners.
“Investing in funds helps in building out the ecosystem and to track larger opportunities in those markets better,” said Kashyap Chanchani, founder and managing partner, The Rainmaker Group, an Indian investment bank. “Firms get access to proprietary deals as well as widen the network and track trends besides simply making returns.”
In turn, the investee companies of these funds, too, stand to gain access to the India market and service base, according to Chanchani.
Linked to America
For the past two years, Peak XV has been building out its US presence to recoup the access it had when the firm was part of Sequoia Capital. One key reason is to help its portfolio companies, which are already based in the US or have links to the US market.
Peak XV has a portfolio of more than 400 companies across financial services, software and AI, and consumer internet, and across stages–seed, venture and growth. Nearly 150 companies have ties to the US market–either for market access or they were founded by Indian origin people incorporating in the US.
Soon after the split in 2023, Peak XV hired Jaime Bott, a former talent executive at Sequoia Capital, to help hire talent for its portfolio companies in the US.
In April 2024, it hired Dini Mehta and Chris Meritt as operating partners in the US. Earlier this month, it hired Arnav Sahu as partner and the firm’s first investment team member in the US. Sahu was previously with Y Combinator. He has also founded a fintech app, BondGrid, and has worked at Spark Capital and Blackstone, PeakXV said earlier this month.
Attrition at Peak XV
Since the split with Sequoia Capital, Peak XV has seen at least half a dozen top executives from its India and SEA team leave. In recent months, partner Shailesh Lakhani and managing directors Abheek Anand and Anandamoy Roychowdhary left the firm.
Last November, Piyush Gupta, managing director at Peak XV, left the firm to launch his own secondaries fund Kenro Capital. Other top executives such as Shweta Raj Kohli and Gayatri Yadav also left the firm. Last month, Shreyansh Thakur, an executive at PeakXV, also made an exit.
Besides employee churn, PeakXV announced last October that it was cutting its management fee for its growth fund to stay competitive in the market. It also returned 16% of its capital from across funds raised for India and SEA, citing an overheated market.
The VC major has sold stakes in its portfolio companies that were either headed for public market listings or pared down stakes in already listed firms such as Ixigo, Awfis, Go Digit General Insurance, Blackbuck, Zomato, Mamaearth, Truecaller, Indigo Paints, Five Star Business Finance, and Mobikwik, among others.
The firm also took some money home by selling either partial or full stakes in its unlisted portfolio such as Rebel Foods, Healthkart, Finova, K12 Techno, and Cloudnine Hospitals.
In all, the firm has clocked over $1.2 billion in exits in the past 12-15 months.
