Early-stage venture capital firm Peak XV is launching a new permanent capital fund, Peak XV Anchor Fund, to invest in and partner with other fund managers across regions, according to sources.
While the exact size of the “perpetual fund” remains undisclosed, it is expected to start small and compound over time, Peak XV told over 100 global investors who gathered for a two-day meet in Delhi.
According to sources, the fund will initially raise capital from Peak XV’s partners and senior leaders and can evolve over time. The fund will not invest in startups directly but will invest in its own main fund. The new fund will not impact LPs nor bring any change in the way LPs invest in the main funds.
Permanent capital vehicles (PCVs)—unlike regular private equity (PE) and venture capital (VC) funds that have fixed lives—can last in perpetuity. Global investment firms like Berkshire Hathaway and Fairfax invest through PCVs. In March last year India’s markets regulator Sebi had set up a committee to explore allowing PCVs in India.
The move comes less than a year after Peak XV’s former parent company Sequoia Capital announced its split into three independent entities—Peak XV Partners, focused on India & Southeast Asia, China-focused HongShan, and Sequoia Capital targeting the US and Europe. Peak XV is based in Singapore and India.
Before the split, Sequoia Capital had filed to raise three new funds focusing on India and Southeast Asia in June 2023. The Economic Times had reported that the SC India Venture VIII, SC India Growth IV, and SC SEA Fund I had a combined target of $2.8 billion.
Peak XV partners and leaders have been contributing to its main funds for many years but the new fund is seen as a move to institutionalise it, the sources mentioned above said. The perpetual fund is expected to create a culture of high accountability and alignment with LPs of Peak XV, which has in the past been involved in a series of governance lapses when it was part of Sequoia Capital.
At least five portfolio companies of Sequoia India & Southeast Asia—BharatPe, Trell, Zilingo, GoMechanic, and Zetwerk—have been caught in the crosshairs of governance issues. Most recently, GoMechanic admitted to making “grave errors in financial reporting”, after which it was sold in a slump sale to Lifelong Group.
Currently, Peak XV is an investor in Indian companies including Blinkit, BYJU’s, CarDekho, CRED, FreshWorks, InfoEdge, MamaEarth, Ola Cabs, OYO Rooms, Zomato and Amazon rival Meesho.