Peak XV slashes fund size, cuts fees on some growth funds | Mint

Peak XV Partners, formerly a part of Sequoia Capital, announced plans to reduce its $2.85 billion growth fund by $465 million, or 16%, while also cutting fees on several other funds. The adjustments come as the firm takes a more measured approach to investments, it said in a statement on Wednesday.

The growth fund, raised in 2022, will now hold approximately $2.39 billion.

“We are investing in a measured manner in our growth fund, while we continue to lean in on seed and venture stage opportunities. As a result, we have made the decision to re-size our 2022 vintage funds by 16%,” Peak XV said in the statement.

In addition to the fund reduction, Peak XV will tie part of its carried interest to the distribution of profits in its growth and multi-stage funds. The firm noted that seed and venture fund economics would remain unchanged.

The decision comes as the broader investment ecosystem faces a dearth of high-quality opportunities, particularly from companies that raised capital at inflated valuations during the pandemic, when funding was more abundant.

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In a letter to limited partners, Peak XV revealed it is lowering its management fees to 2% on three growth and four multi-stage funds, according to media reports. It is also reducing its carried interest—its share of the profits—to 20%. While this approach diverges from market exuberance, Peak XV believes the move will better align with the interests of both its founders and LPs by reducing the cost of capital in the long run.

The reconfiguration follows last year’s major restructuring, when Sequoia Capital split into three independent entities to focus on the US, China, and India-Southeast Asia markets. Sequoia India & Southeast Asia, which raised $9.2 billion across 13 funds, was rebranded as Peak XV after the transition.

Last year, global venture capital giant Sequoia split into three independent entities which separately focused on the US, China and India-Southeast Asia business. Sequoia India & Southeast Asia, which has raised $9.2 billion across 13 funds, eventually became Peak XV after the transition.