Peak XV slashes $2.8 bn fund focused on India, SE Asia by 16%

Peak XV, formerly Sequoia India, has slashed its $2.8-billion fund focused on India and Southeast Asia by 16%, or about $465 million, the venture capital firm said.

The firm will reportedly return the excess funds to investors in an unprecedented move in India, where no other fund has cut its fund size in this manner.

Peak XV, then called Sequoia India, had raised the fund in 2022 for deployment through its $1.2 billion India Growth Fund, $800 million India Venture Capital Fund, and $850 million Southeast Asia Fund.

A significant part of the $465 million cut is expected come from the India Growth Fund.

“In the context of a richly priced public market in India, we are investing in a measured manner in our growth fund, while we continue to lean in on seed and venture stage opportunities,” Peak XV said in a statement on social media.

“While this may be contrarian to market exuberance, this will serve our founders and LPs well in the long term,” it said, while adding that the changes “have been very well received.”

The post concluded by citing a message from a large non-profit limited partner, which read:

“We fully appreciate what a strong and well aligned partner Peak XV is. They’ve always done what is right – finding great entrepreneurs, helping them build thriving companies, and generating strong returns for investors. This reinforces for us that Peak XV remains a top investor and long-term partner.”

The company also said it is modifying the compensation structure for managers of growth and multi-stage funds by linking part of their earnings to the actual profits distributed to investors.

“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,” it said in the statement.

“Carried interest” refers to a share of the profits that fund managers receive as compensation, indicating that fund managers will receive some of their performance-based compensation only when profits are realized and paid out, rather than based on unrealized gains or other metrics.

The company is “on track to have our second best year for distributions and exits in our history, thanks to strong portfolio performance,” it said.