Peak XV, a leading venture capital firm in the Mediterranean region, is reducing its fund size and fees

Peak XV, the largest venture capital firm operating in India and Southeast Asia, is reducing the size of some of its funds and lowering fees as it looks to “engage more deeply” with its limited partners.

The company, which raised $2.85 billion in mid-2022, informed its supporters Tuesday evening that it would reduce $465 million from its 2022 funding, according to a letter shared by TechCrunch.

The venture capital group is limiting growth and multi-stage funds while limiting its economic structure for these vehicles to a base management fee of 2% and 20% interest, down from 2.5% and 30%, respectively.

The letter said Peak XV will maintain interest coverage reserves of up to 30% after achieving a three-time paid-in capital distribution ratio. The economics of seed and venture capital funds remain unchanged.

The move comes more than a year after Peak XV separated from Sequoia. The well-known venture capital firm said it was disassociating itself from its units in China, India and Southeast Asia to avoid conflict and misunderstandings amid geopolitical tensions between Washington and Beijing.

The decision reflects a broader trend in the venture capital industry, where many firms have either reduced the size of their funds or struggled to raise their target amounts in recent years following a correction following a 13-year bull run in the technology sector.

The rationale for Peak XV comes from growing concerns about the uncertain performance of the public market in India and the perceived paucity of venture-scale opportunities in the near future.

Macquarie analysts recently noted that India’s price-to-earnings ratio is around 21 times compared to 10 times for emerging markets overall, 14.5 times for global markets, 17 times for the US and 8 times for China. Notably, India has had more technology initial public offerings than the United States this year.

This is a developing story. More to follow.