Edelweiss Launches INR 3,000 Cr Venture Debt Fund For Indian Startups

Edelweiss Wealth Management (EWM) has launched an INR 3,000 Cr ($361 Mn) venture debt fund, the Edelweiss Crossover Yield Opportunities Fund (ECYOF). The fund is said to be a close-ended Category II alternative investment fund (AIF).

In a statement, Edelweiss said that the fund is being launched when a funding slowdown has gripped the private capital market. The company added that the slowdown has made founders and promoters more sensitive to equity dilution and they are keener on ensuring that they have enough capital to survive the downturn.

“ECYOF is a much-needed alternative that allows venture/private equity-backed high-growth companies to raise additional capital to augment equity financing and continue their growth trajectory,” Edelweiss’ statement added.

Mint reported that the fund would be sector-agnostic, investing across growth-stage startups from Series A onwards. Pranav Parikh and Gaurav Gairola from the company are managing the fund.

Parikh said on the fund’s launch that the company would help emerging startups and enterprises scale with a debt offering. It is prudent to mention here that Edelweiss has a series of funds that offers equity funding to startups in India.

According to Parikh, Edelweiss would bring value additions such as growth capital solutions of debt and equity, ESOP financing for startup founders and senior managers and treasury and forex expertise.

Edelweiss Crossover Yield Opportunities Fund would provide home-grown startups with home-grown capital, Anshu Kapoor, president and head of investment management at Edelweiss Wealth Management was cited in the Mint report as saying.

He was further cited as saying that as volatility increases in private equity markets, many companies have turned to venture debt. Kapoor added that India’s venture debt ecosystem would become a $5 Bn opportunity in the next few years.

Edelweiss also has the Crossover Opportunities Fund series in India. Funds I and II of the Crossover Opportunity Fund series were launched in 2017 and 2018 respectively and saw investors raise a total of INR 2,200 Cr, according to company documents. The funds were raised to be deployed in late-stage and pre-IPO startups.

Last year, Edelweiss launched Fund III of the series with a target to raise INR 5,000 Cr.

Investors have launched or announced funds worth more than $16 Bn for Indian startups in 2022, according to Inc42 statistics. Investors had also launched funds worth $6 Bn last, a big chunk of which is yet to be invested.

Currently, Indian startups are experiencing a funding downturn after last year’s unprecedented funding activity. Per Inc42 figures, Indian startups only raised $3 Bn in Q3 2022, reverting to 2020 levels.