Omidyar Network, supported by eBay founder Pierre Omidyar, is closing its operations in India, according to two sources familiar with the matter who spoke to TechCrunch. This development is a surprising turn of events for the impact venture firm, which has invested in more than 120 startups in the South Asian market over the past 13 years.
The reason behind Omidyar’s abrupt exit from the Indian market remains unclear, and TechCrunch was unable to ascertain the motive for this decision. The local team was reportedly informed of the move on Monday, according to an anonymous source with knowledge of the matter.
This decision comes a year after Omidyar Network, along with nine other non-governmental organizations (NGOs), came under the scrutiny of India’s Central Bureau of Investigation for alleged violations of the Foreign Contribution Regulation Act. This act regulates a firm’s ability to receive overseas donations, and several civil society groups in India have had their licenses canceled over the past nine years.
Following the publication of the news, Omidyar Network stated that the decision was made after “several months of deliberation,” a claim met with skepticism by many insiders. The firm had recently announced five new investments in India in the last two months, participated in a public conference as of Monday, and was currently sponsoring an ongoing podcast series.
While the firm did not respond to a request for comment on Monday, it confirmed the decision after the story’s publication. Omidyar Network cited a “significant change in context and the growth in the economic landscape” in India as the primary reasons for its withdrawal, noting the increased presence of Indian-led philanthropy and venture capital, a thriving startup sector, and shifting investment strategies of funds.
The firm’s board and leadership team plan to assess how to manage the portfolio startups over the next two months. Omidyar Network had employed over three dozen people in India. The firm asserted that it had achieved its primary objective of catalyzing impact in India and would not make any further investments in the country.
According to a separate source, the India team is considering reuniting, raising external funds, and starting a new fund, though plans are in the early stages and subject to change.
Omidyar Network had backed startups in India aimed at addressing challenges faced by approximately half a billion people in the country. Some of its portfolio startups included 1mg, Bounce, Vedantu, Bijak, DealShare, Doubtnut, Entri, HealthKart, Indifi, M2P, and Pratilipi.
As of July of the current year, Omidyar Network India managed approximately $673 million in cumulative assets, and its portfolio startups reached 735 million people, as per an investor presentation. However, 2023 has proven to be a challenging year for the firm, with the sale of Doubtnut for $10 million and the closure of ZestMoney, both of which were backed by Omidyar Network India.
India has become a significant market for venture and private equity investors, but many have faced challenges in achieving profitability. While some, like Baron Capital, see India as the new growth opportunity, others, including Tiger Global’s Scott Shleifer, have acknowledged historical difficulties in delivering high returns in the Indian market.
