Sequoia India and Southeast Asia is broadening the range of its check size for the Surge program as the storied venture firm attempts to make its seed investments more “relevant for a larger set of founders,” it said Thursday.
The venture firm’s check range for the three-year-old Surge program, which previously made $1 million to $2 million investments in early-stage startups in the region, will now vary between $300,000 to $3 million, it said.
The move comes as the firm, the most powerful and influential venture investor, realizes that some of the early-stage startups it backs through its Surge program need more money especially during the current market conditions, while some firms are at such a nascent stage – where they don’t have a product, for instance – who could do with smaller checks, said Rajan Anandan, a managing director at Sequoia India and Southeast Asia, in an interview with TechCrunch.
Anandan dismissed the idea that the decision is a response to the current market conditions, saying Sequoia had been formulating the change several months ago, but said “in this context, it would be even more helpful.”
As the size of its investment changes, the firm said it is not looking to take more ownership in the young startups. The equity range against its investments will continue between 10 to 20% as the ceiling limit, whereas there will be more flexibility to the floor range, he said.
Sequoia began the Surge program, which is similar to Y Combinator’s model, in 2019. The firm selects 15 to 20 startups every six months or so after evaluating hundreds of applications and in-person meetings, and groups them in cohorts. The cohort spends 16 weeks learning the fundamentals of finding their voice, best practices and establishes relationship with peers.
The firm, which has run seven such cohorts to date, said it has backed 112 startups through the Surge program who have collectively raised over $1.5 billion in follow-on rounds. “Over 20% of Surge startups were pre-launch when we partnered with them,” Sequoia said.
The size of the cohort, however, is not considerably changing. “We like the 15-20 number. Our cohort sizes will roughly remain the same. We have 30 members for Surge that ranges between people who help firms with tech, marketing, and finances. One of the things we have learned is that keeping the cohort to its current size lets us go very deep with every single one of our companies,” he said.
Sequoia is also doing away with a dedicated fund for the Surge program. Earlier, it raised $195 million twice for the early-stage fund, but now it will draw capital directly from the larger mothership, which unveiled record $2.85 billion funds for the region earlier this month, Anandan said. “It’s fair to assume we will invest more than ever through Surge,” he said.
Source: Read More