General Catalyst merges with Venture Highway in India push

General Catalyst, a Silicon Valley-based venture capital group, is expanding its presence in India by joining forces with local venture firm Venture Highway and earmarking $500 million to $1 billion for investments in the country.

Venture Highway’s investments include social commerce startup Meesho and B2B industrial marketplace Moglix. TechCrunch reported in January that the two venture firms were discussing a tie-up.

The deal will see the combined entity plot a multi-stage investment strategy for General Catalyst in India, spanning early- and growth-stage startups across industries, Venture Highway’s founder, Neeraj Arora, and General Partner Priya Mohan told TechCrunch in an interview. 

Venture Highway, which raised $78.6 million for its second fund in 2020, has traditionally focused on early-stage investments. As part of the General Catalyst team, it will expand its remit to incubating startups. “Our vision is to be part of building a number of companies that will not only go public but also be needle-moving for the economy,” said Mohan.

General Catalyst, which manages over $25 billion in assets, plans to invest between $500 million to $1 billion in India over the next three years, said Arora, who previously served as chief business officer at WhatsApp and played an instrumental role in the instant messaging app’s sale to Meta.

The deal positions General Catalyst as one of the largest venture capital firms in India, alongside the likes of Lightspeed, Accel, Elevation and Nexus, which have each raised between $500 million and $700 million for their recent funds. Peak XV Partners (formerly Sequoia India and Southeast Asia) leads the pack, with a $2 billion fund earmarked for investments in the country.

General Catalyst isn’t acquiring Venture Highway’s portfolio, but will consider it “very much part of the GC portfolio going forward,” Hemant Taneja, General Catalyst’s CEO, told TechCrunch.

“We want to support [these portfolio companies] the same way we support any of our companies in India or anywhere else in the world,” he said. 

The two firms began exploring ways to collaborate several years ago, but the timing was right at the moment, said Arora. “We could have gone out and raised more capital. That was one of the options on the table. But thinking from first principles, when we think about the opportunity that is in India today, and what our ambitions are, it made sense for us to join hands with General Catalyst,” he said. 

India has become one of the world’s fastest-growing major economies over the past decade, with its GDP rate touching 8.2% in the latest financial year. Favorable policy changes have spurred growth across industries, attracting some of the world’s largest investors.

SoftBank, Tiger Global, Peak XV, Lightspeed, Accel and others have deployed about $100 billion in Indian tech startups in the past five years alone and are beginning to see some returns as many of those firms go public. But “returns on capital in India have sucked historically,” Tiger Global’s Scott Shleifer said at a virtual gathering with Indian entrepreneurs last year.

India is not new territory for General Catalyst, which has been investing in the country for over a decade. Its portfolio includes fintech unicorn CRED, used car marketplace Spinny, and healthtech startup Orange Health. The firm recently co-led a funding round with Indian conglomerate Tata that was raised by Alsym Energy, a company developing non-flammable rechargeable batteries.

Taneja anticipates more partnerships with Indian conglomerates going forward. “I believe that many of the conglomerates in India are very entrepreneurial and will play a significant role in the growth opportunity of India,” he said. “Some of the opportunities we want to invest in or help build in India, it might make sense to radically collaborate with them.”

“When you’re transforming industries, no matter where you are in the world, you have to team up with the industry leaders,” Taneja added. “We do that in healthcare here [in the U.S.] with a lot of healthcare systems; we are actively working with various governments when it comes to policy and issues and things like AI.”

Thursday’s announcement follows a similar move by General Catalyst in Europe last year, when the firm unveiled plans to merge with Berlin-based venture firm La Famiglia. Taneja declined to comment on whether his firm will seek to replicate the model in other markets. General Catalyst is in advanced stages to close a $6 billion fund, FT reported in April.