PeakXV Logo.
Credit: peakxv.com/
Bengaluru: Venture capital fund Peak XV Partners (formerly Sequoia Capital India & SEA) said on Wednesday that it is cutting its latest growth fund by 16 per cent, which amounts to $465 million of the $2.85 billion fund raised in 2022. The VC said in a statement, “We have made voluntary changes that we believe will serve us well in a multi-decade time horizon.”
The firm also reaffirmed their commitment to investing in India and South East Asia. “We are on track to have our second best year for distributions and exits in our history thanks to strong portfolio performance,” the statement said.
The firm explained that they are investing in a measured manner in their growth fund, while they continue to lean in on seed and venture stage opportunities.
“We have also decided to make some part of our carried interest linked to distribution of profits in our growth and multi-stage funds while leaving our seed and venture fund economics unchanged,” they said. “While this may be contrarian to market exuberance, this will serve our founders and LPs (limited partners) well in the long term.”
This year, Peak XV has witnessed $1 billion in exits. This move also comes post its split from Silicon-Valley based Sequoia Capital, which was divided into three independent bodies in June 2023 (Sequoia Capital (US/Europe), Sequoia China, and Sequoia India & Southeast Asia).
The firm is also realigning to a 2/20 compensation structure, according to media reports based on an internal letter. It lowered its management fees to 2% on three of its growth and four of its multi-stage funds. Peak XV also lowered carried interest to 20% for these funds. Peak XV is reportedly struggling to back companies with reasonable valuations for their growth funds amidst Indian companies witnessing a rocketing equity market.