How LPs from Silicon Valley Benefit from Sequoia Capital PE Funds Surge’s Lower Valuation-Based Fees.

Similarly, Pune-headquartered online tutoring company InterviewBit Academy is reported to be raising $20 million at a post-money valuation of $100 million, according to a Times of India report. Sequoia, Tiger Global and EDBI—the corporate investment arm of Singapore’s Economic Development Board—are said to be leading the deal.

Even in Southeast Asia, where dealmaking has been slower (likely due to it being a more nascent market), Sequoia still has various irons in the fire.

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There’s Zenyum—a startup that sells affordable invisible braces across the region—which is closing in on a $10 million round at a pre-money valuation of $45 million, a person with knowledge of the deal revealed. Notably, Sequoia has committed to co-leading that investment, while GGV Capital and EDBI are among those currently locked in negotiations, the person added.

Elsewhere, Telio, a B2B e-commerce startup in Vietnam, and ShopUp, an e-commerce firm based in Bangladesh—the lone Surge representative from outside of India or Southeast Asia—are among those holding “serious” conversations with international funds. The potential investors, once again, are the aforementioned GGV Capital, Tiger Global, EDBI and DST Global. Both companies seek to raise large Series A rounds, the same person and another venture capital profession said.

The fact that Sequoia is investing from its main fund so soon raises some conflict. The firm distinguishes between Surge and its India and Southeast Asia fund, but it stands to benefit from increased valuations, even if, as Sequoia has said, the numbers are validated by third-party investors who commit to the deals.

A high-stakes gambit

It’s no wonder, then, that VCs who play in Southeast Asia’s Series A and Series B spaces feel put-out by Surge. Aggressive valuations, the presence of global funds and high rounds threaten to disintermediate them. Sequoia isn’t setting the numbers, but Surge is allowing founders to meet investors from a position of strength thanks to the $1.5 million cheques and the backing of a tier-one VC.A high-stakes gambit

But there is significant risk. It’s too early to know whether the high valuation gambit will work for all companies. Crucially, it remains to be seen what happens to those that can’t raise at their chosen valuations.

As one venture capital professional said, if the market pushes back, “Surge would be known as an accelerator for companies that revise their targets or don’t hit their numbers. That’s not what Sequoia does—they are known for investing in the best companies doing things in each market and they become unicorns.”

There’s time before such a scenario would play out, but there are other ways that Surge companies stand out.

For one, the experience for founders is on a different level to your typical Southeast Asia accelerator. The 16-week Surge programme took founders to Singapore, India, China and the US, where they met a bevvy of top industry names including Michael Moritz and other top Sequoia partners in North America, and founders of prominent startups like Stripe, the online payment company valued at $22.5 billion. While it has been suggested to The Ken that some of the programme’s mentors played fleeting roles, the involvement of Sequoia’s local organisation has been praised.