Impact investment fund Omidyar Network India is exiting India after over a decade of investing in the country and said it will stop new investments immediately.
The fund – which has invested in the likes of Tata-owned e-pharmacy 1MG and edtech Vedantu, fintech startups Kaleidofin, Kiwi, M2P Fintech and Indifi, among others – on Tuesday said it will completely transition out of the Indian market in 2024.
“Having achieved our primary objective of catalysing impact, Omidyar Network India will not be making any further investments in India,” it said in a statement.
This means the fund will now mainly focus on exits, people aware of the discussions told ET.
The development comes at a time when the domestic startup ecosystem has gone through a complete reset this year as several startups have continued to face the chills from an ongoing funding winter. Further, 2024 is expected to be an even tougher year as the rout in the funding market is likely to continue amid unfavourable macroenvironment.
Sudden move
Omidyar Network India is currently deliberating on how to manage its existing active portfolio and has told founders of its portfolio companies that it will continue to operate in maintenance mode and retain its team for over the next year or so, half a dozen founders told ET requesting anonymity.
Briefing founders of its domestic portfolio over individual calls, the impact investment firm has also told them it will continue to retain its board seat in these companies, the above people said.
However, it has not disclosed the exact reason as to why the decision was taken to discontinue newer investments, they added.
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“It seems like a global mandate, with the decision to discontinue coming from the top,” one of the founders said. “Even many members of the India team weren’t informed. They were looking at hiring folks in India and made investments as early as a week ago.”
As per Omidyar’s statement, the decision to stop new investments was a result of “significant change in context and the growth in the economic landscape that the India-based team has experienced since first making investments there in 2010”.
The move, however, will have no impact on early-stage fintech-focused fund Flourish Ventures, which also counts Pierre Omidyar as its sole limited partner (LP), the impact fund informed some portfolio founders.
Omidyar Network India currently has about 90 active companies in its portfolio. It has deployed a total of $500 million in the domestic market so far – $350 million in for-profit companies and the rest in non-profits.
FCRA, other issues
Omidyar’s decision to exit from the Indian market comes more than a year after the Central Bureau of Investigation (CBI) reportedly accused the investment firm among other non-governmental organisations for allegedly conspiring to illegally facilitate the registration and renewal of Foreign Contribution (Regulation) Act (FCRA) licences.
“FCRA and their grant money could have been a trigger for the fund to look at such a move of stopping new investments,” one of the founders cited above said.
Last month, Omidyar Network India head and managing partner Roopa Kudva had retired from her position at the fund.
Portfolio founders ET spoke to said the fund assured them that there is no pressure as such for an exit.
One of them, though, said, “Usually, founders like long-term backers on their board. However, with now the fund looking at an exit, founders may look to replace Omidyar with other backers, not just on the board but also on the cap table.”
The investor, in its statement, said, “Over the next two months, the board and leadership team will assess how best to manage the organisation’s portfolio while recognising the long and trusted partnerships that the Omidyar Network India team has built.”
Over the last year, Omidyar has seen some of its portfolio companies fold, including buy-now-pay-later (BNPL) credit provider ZestMoney.
