Omidyar Network, supported by eBay founder Pierre Omidyar, is ceasing its operations in India, as reported by two sources familiar with the matter to TechCrunch. This development is surprising for the impact venture firm, which has backed over 120 startups in the South Asian market over the last 13 years.
The reason for Omidyar’s sudden withdrawal from the Indian market is unknown, and TechCrunch was unable to ascertain the cause. The local team was informed of this decision on Monday, according to an anonymous source due to the confidential nature of the matter.
This decision follows a year after Omidyar Network and nine other NGOs faced scrutiny from India’s Central Bureau of Investigation for alleged violations of the Foreign Contribution Regulation Act, which regulates a firm’s ability to receive overseas donations. Thousands of civil society groups in India have had their licenses canceled in the past nine years.
In response to the publication of the story, Omidyar Network claimed that the decision was made after “several months of deliberation,” a statement met with skepticism from insiders. The firm had recently announced five new investments in India in the last two months, participated in a public conference on Monday, and sponsored an ongoing podcast series.
Omidyar Network confirmed the decision after the story’s publication, citing a “significant change in context and the growth in the economic landscape” in India since its initial investments in 2010. The firm acknowledged the increased philanthropic and venture capital activities led by Indians, a vibrant startup sector, and a shift in investment strategies towards middle and lower-middle-income focuses.
The board and leadership team will assess how to manage the portfolio of startups over the next two months, and the firm, which employed over three dozen people in India, will no longer make new investments in the country.
Despite achieving its primary objective of catalyzing impact in India, Omidyar Network India plans to attempt to reunite, raise external funds, and start a new fund. However, caution is advised as plans are in the early stages, subject to change, and deliberations may fail.
Omidyar Network’s portfolio in India included startups like 1mg, Bounce, Vedantu, Bijak, DealShare, Doubtnut, Entri, HealthKart, Indifi, M2P, and Pratilipi. As of July this year, Omidyar Network India managed about $673 million in cumulative assets, with its portfolio startups reaching 735 million people.
The year 2023 has been challenging for Omidyar Network India, with notable setbacks such as the sale of Doubtnut for $10 million and the shutdown of ZestMoney, both previously backed by Omidyar Network India.
India has become a crucial market for venture and private equity investors over the past decade, attracting attention as startups scale to serve the world’s most populous market. While some investors, like Baron Capital, see India as the new China with significant long-term investment appeal, others, including Tiger Global’s Scott Shleifer, acknowledge historical challenges in achieving high returns on equity in the Indian market.
