The gangbuster growth years are over as far as Sequoia Capital India is concerned.
COVID-19 has upended the stakes and expectations for investors and startups alike. To founders who have found themselves in the middle of this quagmire, Sequoia Capital managing director Abheek Anand says there’s little point in fixating on growth this year.
“Nobody’s looking at growth. In fact, I think 2020 financials are going to be ignored forever. When investors assess financials, they’re going to look at 2018, 2019, skip 2020 and then on to 2021, 2022…” he said in an interview.
Sequoia, he said, has been advising its portfolio companies to spend time making those “hard decisions” to fix fundamental aspects of their business they couldn’t spend time fixing before. This could mean reducing cash burn, focusing on unit economics and building a more resilient path to profitability.
The venture capital firm declined to comment on the progress of its fundraise and existing fund allocations for the region but said it is on track to continue deploying at the same pace as 2018 and 2019.
Sequoia Capital India invests in about 25-30 companies per year in Southeast Asia across seed to late stages. Its portfolio companies include the likes of Indonesia’s Gojek, Tokopedia and Akulaku, and Singapore’s ONE Championship, Circles.Life and Carousell.
The Silicon Valley venture capital firm was last reported to be seeking to raise about $7 billion for a set of venture funds across China, India and the US.
Sequoia’s Anand will be joining Vertex Ventures’s Chua Kee Lock to discuss dealmaking in times of COVID-19 in DealStreetAsia’s next online webinar on 14 May 2020. Registration is open to subscribers only.
Edited excerpts of an interview with Abheek Anand:
We saw a spike in the number of deals in Q1 this year, coupled with a 3% rise in total deal value compared to last year. But the median value of these investments has actually gone down. We suspect this has to do with the impact of lower valuations as well as the WeWork effect from last year. What’s your thought around this?