Venture debt has picked up traction in the Indian startup ecosystem, especially post the funding boom in 2015. With the traditional banking route becoming difficult for venture-backed startups — due to the inability to provide collateral and positive cash flow — venture debt in India provides an alternative financing model to startups majorly dependent on venture equity-based funding.
According to an Inc42 Plus report, the Indian startup ecosystem is home to approximately 119 unique investors who participate in debt funding rounds, but there are only a handful of pureplay venture debt firms including InnoVen Capital, Trifecta Capital, Blacksoil, Stride Ventures — and Alteria Capital.
Just a day after InnoVen Capital announced that it raised INR 740 Cr ($100 Mn) towards the first close of its new independent fund, Alteria, another pureplay venture debt firm has confirmed that post-SEBI (Securities Exchange Board of India) approval, it has closed the oversubscribed, & largest venture debt fund in the Indian startup ecosystem at INR 1,800 Cr (a little over $242 Mn).
The investor mix for Fund II includes domestic institutions, large family offices, senior corporate professionals and VCs and founders from the startup ecosystem, the company said in a statement.
One of the most active venture debt investors in India, Alteria has an AUM (assets under management) of INR 2,750 Cr ($370 Mn) across two funds, making it the largest pool of venture debt capital for Indian startups.
Founded in 2018 by Ajay Hattangdi and Vinod Murali, the venture debt funds’ introductory fund had a corpus of INR 975 Cr ($130 Mn).
According to the company statement, Fund II, which has already drawn 35% of capital and funded 20+ startups, will back venture equity-backed early and growth-stage startups with its debt solutions and cheque size up to INR 200 Cr (approx $27 Mn).
It also plans to allocate structured debt products aimed at later-stage startups which have a differentiated risk profile.
Alteria expects to deploy more than $175 Mn in 2021 across both funds.
Some of Alteria’s portfolio companies are, Lendingkart, Zestmoney, Dunzo, Portea, Toppr, Spinny, Stanza, Vogo, Melorra, Mfine, Generico, Loadshare, LBB, Maverix, Country Delight, Clover, Happay, Cropin, Cityflo, Onco, Nua, Damensch, Faces Cosmetics and Universal Sportsbiz.
Overall, between 2019 and 2020 there has been a 2x surge in total venture debt funding in Indian startups from $217 Mn to $427 Mn. In 2021, alone we have seen the closure of several venture debt funds besides Alteria and InnoVen.
In August 2021, Stride Ventures closed its Fund II, securing commitments of INR 550 Cr from of its target corpus of INR 1,000 Cr. In March 2021, Trifecta Capital announced the final close of its second fund, Trifecta Venture Debt Fund-II at INR 1,025 Cr (roughly $150 Mn), investing recycles amount upto INR 900 Cr in 38 startups.
Prior to that, in November 2020, NBFC BlackSoil raised INR 110 Cr in the first close of its alternative investment fund (AIF) looking to back real-estate startups.