Exclusive: Accel India Nears Close on $150M for Second Early Stage VC Fund

Last month, the Times of India reported that Accel Partners was scrapping plans for a $400 million fund focused on late stage investments. However, Accel India is still raising a $150 million fund focused on early stage opportunities, sources tell peHUB.

Accel is meeting with limited partners as it nears completion for the fund, slightly more than the VC was previously reported to be raising in July by Business Standard, another Indian publication. Accel is expected to close on the fund in a matter of weeks, three sources tell peHUB.

The new fund will concentrate on early and seed stage investments, peHUB’s sources said. Return data on Accel’s first India fund were not readily available; however, it is a little too early to jump to any conclusions.

Accel’s presence in India began with the its 2008 acquisition of Erasmic Venture Partners, an Indian fund that launched in 2007 with $10 million. Accel put another $50 million into the fund, which backed such companies as Chakpak and Exclusively.In. With Erasmic came four partners: Subrata Mitra, Prashanth Prakash, Mahendran Balachandran and Gagan Kumar. Other investments from the first fund include Sconce, Kaati Zone, Myntra and Inbiopro.

Already, 2011 has been a heady year for VC activity in India, which has a growing Internet economy. VCs have been increasingly allocating capital to Indian investing. Earlier this year Bessemer Venture Partners stated that it would dedicate about a quarter of its $1.6 billion fund to deals in India.

As the environment becomes competitive, some VCs are having trouble hanging onto talent. Four managing directors left Sequoia Capital’s India fund earlier this year to launch their own fund, and a handful of SVB India executives split off to launch Saama Capital, according to reports.

The market has become so heady that Intel Capital India’s Sudheer Kumar Kuppam recently said it “feels like ’99 in the US.”