The $1.3b fund targeting Aussie start-up founders
The venture capital fund behind collapsed grocery delivery start-up Voly wants to place more bets on local founders and is armed with a fresh $US850 million ($1.3 billion) of capital to allocate to Australian and Southeast Asian companies.
Partners from Peak XV, formerly known as Sequoia India and Southeast Asia, have made monthly trips to Australia to get to know local founders and added two new Australian start-ups, Mercu and Relevance AI, to its growing portfolio.
Singapore-based Rohit Agarwal says Peak XV’s partners have travelled to Australia monthly this year to get to know Aussie start-up founders.
Peak XV managing director Rohit Agarwal said the firm’s 2021 investment in Voly, which closed its doors in late 2022, had not sobered its appetite for Australian investments and he is still on good terms with the founders Thibault Henry and Mark Heath.
“It’s never good to lose money, but I think we understand that in this business when you’re backing founders at an early stage that are going after something which is improbable – but audacious – you will have setbacks from time to time,” Mr Agarwal said.
“There are many instances when we have backed a founder where the company has not worked out, and we’ve gone and backed them in their second venture or third venture, and it has proven to have made up for everything.”
Sequoia India rebranded as Peak XV (pronouncing the Roman numerals as cardinal numbers, Peak 15 – the previous name for Mount Everest) after the Silicon Valley-based Sequoia Capital split off its China and India units in June, amid tension between Washington and Beijing over private investment in areas such as artificial intelligence and semiconductors.
The 18-year-old venture firm manages more than $US9 billion in capital across 13 funds and has invested in over 400 companies, such as food delivery giant Zomato, software firm Freshworks, and hotel booking platform Oyo.
It has a portfolio of 10 Australian start-ups including fintech Shift, corporate video creation company 90 Seconds, HealthEngine, cryptocurrency lifestyle app StepN and AI start-up Strong Compute.
Mr Agarwal said the firm planned to use it $US850 million fund to make investments between $US2 million and $US25 million in Australian start-ups, giving them enough dry powder to take up a third or half of the fundraising rounds pitched between $50 million to $75 million.
“Across many sectors we find Australian founders build beautiful products and build them very capital efficiently,” he said.
Mr Agarwal, who also sits on the board of Shift, said Peak XV would use the same model it had developed for Indian companies to expand internationally and to help Australian founders scale globally.
“If you’re a software company that gets started in the Silicon Valley, your challenges are very different from a company that starts in Sydney or Bangalore.
“After you reach $3 million in ARR [annual recurring revenue], your biggest challenge is building a presence in markets outside Australia or India.”
Peak XV’s newest Australian investments were made through its accelerator program, Surge, which provides between $US1.5 million and $US3 million to 13 start-ups along with mentoring and a series of company workshops.
Relevance AI is a machine learning start-up founded in March 2020 by a former IAG data scientist Jacky Koh and software engineer Daniel Vassilev. While Mercu is an employee engagement platform, founded by Elliott Gibb and Jascha Zittel who both formerly worked for food delivery giant Grab.
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