Some of our best firms globally were created in downturns: Sequoia India MD

At a time when the start-up ecosystem is going through a funding slowdown, Sequoia India is seeing a new window of opportunity for semiconductor start-ups – a fairly nascent sector in India – where it has recently taken two new bets.

“Some of our best companies globally have been created in downturns and recessions,” Mohit Bhatnagar, Managing Director, Sequoia India, told Business Standard. “So, this is a great time for us to do the primary work needed to explore new sectors like semiconductors. It’s actually a pretty fun time to be a VC,” he says.

The investment giant recently took a bet in InCore Semiconductors, a start-up building RISC-V processor cores in India, infusing $3 million into the fledgling firm as a seed funding. The investment was announced at the Ministry of Electronics and Information Technology’s ‘SemiCon India FutureDesign Roadshow' led by Minister Rajeev Chandrasekhar at IIT-Delhi on May 12.

RISC-V is a set of instructions that defines how a particular software interacts with a chipset.  

“RISC-V is very core to our (investment) strategy,” says Bhatnagar. “Because, at the moment, Instruction Set Architecture (ISA) of RISC-V allows young companies or founders to be able to disrupt the existing monopolies around proprietary ISAs. So, this will be very core to what we do. Both the investments that we have made are on the back of this RISC-V core.”

This was Sequoia’s second semiconductor investment this year. The firm had earlier invested in Mindgrove, an IIT-Madras incubated start-up which is designing System on Chips (SoCs) in India, for the world.

“Everything that is large started small at one point in time. The only reason we are focusing on semiconductors is because we see a market opportunity and a window that allows disruption through RISC-V,” says Bhatnagar.

As much as 25 per cent of the world’s semiconductor design engineers are in India. That kind of talent density, Bhatnagar believes, gives India a leg up. “Over the years, all the back-ends for many semiconductor firms were built in India,” he says.

Pioneering projects like SHAKTI or RISC-V, Bhatnagar says, are offering India some key differentiators.

SHAKTI is an open-source initiative IIT, Madras, to develop the first indigenous, industrial-grade processors.

Sequoia’s investment strategy for its semiconductor bets, Bhatnagar revealed, will largely follow the firm’s global investment blueprints.

Among other sectors that Sequoia is betting big on include Software-as-a-Service (SaaS), consumer tech, fintech, and emerging, sunrise sectors like spacetech and electric vehicles (EVs).

“We continue to see a lot of SaaS companies – where software is being built in India for the world – very much remain a part of our core pipeline. Developer tools – which are helping a number of developers in this country automate and deal with their data stack, also remain a very large part of our thesis.”