Sequoia Capital plans to deploy $600 million in 2-3 years

Venture capital major Sequoia Capital is planning to deploy about $600 million (Rs2,715 crore) in the Indian market in the next three to four years.

The company has so far deployed about $1.4 billion. Of this, about $900 million has already gone into various ventures that it had identified.

“We are looking at niche areas for investment. We have not focused much on conventional areas such as infrastructure since the areas we have identified offer better capital efficiencies,” GV Ravishankar, managing director, Sequoia, told DNA.

Sequoia has invested in a variety of sectors, including education, healthcare and microfinance in the Indian market. Over the last 10 years, it has invested in about 50 Indian companies including Cafe Coffee Day, Comviva (Bharti Telesoft), Idea Cellular, Ind-Barath Power, Just Dial, Manappuram Finance, Paras, Shaadi.com, Quick Heal, Micromax, SKS Microfinance and Vasan Health Care.

“Our investment strategy has two parts. Early stage investments take less capital, though the risk is also on the higher side. Similarly, we also take up growth investment in late stage funding,” he said.

Sequoia is looking at exiting 6-8 firms in the next 12-18 months. Though the exits conventionally happen through the initial public offerings, Sequoia is likely to evaluate other options for exiting, including stake sale to other buyers.

Interestingly, the Sequoia MD has expressed his confidence in revival of activity in the microfinance sector.

“There is a regulatory overhang at this point. A law to regulate the sector is yet to be in place. We are confident that the sector will be back to normal. As far as our investments in the microfinance institutions (MFIs) are concerned, we have been a happy investor with good returns on what we had invested,” he said.

Sequoia has invested in SKS, Ujjivan and Equitas Microfinance. “There is no truth in what is being said about MFIs. The objective of MFIs is to bring in financial inclusion. If the interest rates can be much lesser than what MFIs are charging, why are these banks not lending at that rate? Anyway, once the issues settle, there is going to be a new breed of companies emerging,” he said.

According to him, the fund is not looking at exiting SKS at this point. “We have no such plan at this point,” he said.

On Tuesday, Sequoia announced an investment of Rs25 crore in K12 Techno Services in their second round of funding.

K12 manages over 70 affordable English medium schools run by 15 different trusts under the Gowtham Model School brand in Andhra Pradesh.

In fact, several venture funding companies have been eyeing opportunities in the education sector for deploying their funds.

“The market opportunity in education is very large. The sector is under served. There are secular growth trends in the sector. But, it is still not clear if the excitement plays out the way we see it,” he said.