Investment firm Omidyar Network to exit Indian market after a decade of operations: Here's why

Omidyar Network India, an impact investment firm backed by eBay founder Pierre Omidyar, is set to exit India after a decade of operations.

The firm, known for its dual-chequebook investment model, has played a significant role in building the impact investment sector in India, focusing on the ‘Next Half Billion’.

“After several months of deliberation, it has been decided that Omidyar Network India will stop making new investments and will completely transition out of the market by the end of 2024. Over the next two months, the board and leadership team will assess how best to manage the organization’s portfolio while recognizing the long and trusted partnerships that the Omidyar Network India team has built,” the group said in a statement.

The reasons behind the decision

The decision to exit was influenced by the significant changes in India’s economic landscape since the firm’s initial investments in 2010.

The growth in Indian-led philanthropic and venture capital activities, a vibrant startup ecosystem, and the focus of several funds on middle and lower-middle-income segments have been cited as key factors. The firm believes that the Indian market now has more local capital and investment strategies that align with its mission.

“Today, there is more Indian led philanthropic and venture capital than ever before, the country has a vibrant start-up sector, and several funds now have a middle and lower-middle income focus as part of their investment strategy. From its outset, the Omidyar Network India team identified these system shifts as critical to impact and worked diligently to help catalyze this change,” it added.

The transition process

Omidyar Network India plans to completely transition out of the market by the end of 2024. The firm said the next two months will involve the board and leadership team assessing the best approach to manage the organization’s portfolio, considering the long and trusted partnerships they have built in the Indian startup ecosystem.

Since its inception, Omidyar Network India has backed nearly 75 startups, including notable names like Tata 1mg, Bounce, and Doubtnut. As of July 2023, TechCrunch reported that the firm reportedly had about $673 million of cumulative assets under management in India.

Challenges and Future Plans

2023 has proven to be a difficult year for Omidyar Network India, as several of its invested startups, such as Doubtnut, which was acquired by Allen Career Institute for $10 million, did not achieve the anticipated outcomes. Notably, it was one of the investors in ZestMoney, a fintech startup that recently shut down its operations due to financial difficulties.

According to the reports, There are talks that the India team plans to reunite and raise money externally to start a new fund, although these plans are still in the early stages and subject to change.

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