Lightspeed targets $250M for new India fund focused on early-stage AI

Lightspeed is targeting $250 million for a new early-stage fund in India that will focus entirely on artificial intelligence, according to a letter sent to investors on Thursday and seen by TechCrunch.

The Silicon Valley firm is already a major investor in AI companies including Anthropic, xAI and Databricks. In India it has backed Sarvam AI, one of the country's leading large language model developers and a startup selected by the Indian government to help build sovereign AI models.

A smaller fund and a shorter cycle

The new vehicle, Lightspeed India Partners V, will be half the size of its $500 million predecessor, which was raised in 2022 and has already committed 80% of its capital to startups. Lightspeed disclosed the fund in a US regulatory filing in late April without naming a target size; Indian media had earlier reported that the firm was seeking between $300 million and $350 million.

Investing from the new fund is set to begin within two months, with an investment period of roughly two and a half years. Until then, Lightspeed will make its final investments from the existing fund. The same team that managed its previous four India funds will run the new one. A spokesperson declined to comment.

AI thesis and India's funding gap

The investment thesis outlined in the letter expects AI to create more value in India than the internet did, with the fund hunting for AI companies across India and Southeast Asia. That is a sharper thematic focus for a firm that has historically invested across the region's sectors, from quick commerce to consumer internet, software and household services.

India has yet to produce a frontier AI model developer with a global footprint and has attracted far less AI investment than the US and China. Investors increasingly see the application layer as the country's opening, pointing to a large pool of software developers and decades of experience in technology services.

Global scale, regional comparison

The India fund is small next to Lightspeed's global platform, which manages more than $65 billion in assets. Last December the firm raised $9 billion across several funds, its largest haul ever, including a $980 million early-stage vehicle. Its India and Southeast Asia funds have deployed about $900 million, while global funds have put another $1.6 billion into regional portfolio companies.

Rival Accel offered a comparison point in August, closing a $550 million India fund alongside new US and European vehicles as part of a $3.5 billion fundraising. Lightspeed is also moving its India funds onto the same fundraising cycle as its global funds for the first time.