US-based venture capital firm Lightspeed has reduced its fifth India-focused fund target to between $300 million and $350 million from as much as $500 million, according to The Economic Times. The firm is shifting its focus toward early-stage AI and deeptech investments.
Strategic Shift and Fund Sizing
The fund reduction represents a return to Lightspeed’s earlier India fund sizes. The new target sits closer to the firm’s first three India funds, which were sized at $135 million, $180 million, and $275 million respectively. The smaller pool aligns with an early-stage investment approach, where venture capital firms typically back more companies and write smaller initial checks.
Lightspeed’s previous India and Southeast Asia fund (Fund IV) raised $500 million in 2022, marking the peak of the firm’s India fundraising.
Portfolio Context
The reset follows questions around some of Lightspeed’s Indian growth-stage investments, including Byju’s, Oyo, ShareChat, Udaan, PhysicsWallah, Razorpay, and Zepto.
More recently, Lightspeed has backed AI startup Sarvam and spacetech firm Pixxel, reflecting its new investment thesis.
Competitive Landscape
Lightspeed is not alone in this strategic pivot. Peak XV, Accel, Nexus, and Stellaris have also raised India-focused vehicles with increased attention on AI and deeptech investments.
Broader Market Trends
The shift reflects a broader movement in Indian venture capital away from consumer internet models that consume significant capital. Deeptech’s share of private equity and venture capital funding in India has risen from 4% in 2016 to nearly 15% in 2025, according to industry analysis.
Investors are increasingly favoring startups with defensible intellectual property, such as proprietary technology or patents, rather than businesses pursuing costly user acquisition. Deeptech startups often require patient early-stage funding followed by larger rounds for manufacturing and international expansion.
Support for this sector is building: The India Deep Tech Alliance, an industry group focused on advancing India’s deeptech sector, has committed $1 billion to Indian AI startups.
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