In the past few years, the Indian startup ecosystem has observed a steep growth in debt financing. The trend can be verified with the fact venture debt firm InnoVen Capital India in 2017 deployed $75 million in the startup ecosystem, through debt financing.
The Temasek-backed debt financing firm also added 22 new companies to its portfolio, registering an annual growth of 25 per cent, according to Economic Times.
Besides, the firm also has credit facilities of $10 million taking the entire disbursement amount to $85 million across 35-40 deals, meeting its projected target of $80-100 million for FY 2017-18.
The significant growth in InnoVen’s deal dynamics also comes on the back of the largest venture debt deal of $15 million to online travel marketplace Yatra.
Ashish Sharma, CEO of InnoVen Capital observed that the financing firm has nearly 60 per cent of total funding in growth-stage companies.
Innoven Capital has invested over 40 per cent of the $75 million in growth stage companies such as OYO Rooms, Swiggy, Capillary Technologies, RentoMojo and Belong. Since its inception in 2008, the debt financing firm has made a total venture debt investment of $270 million across 165 deals in over 110 companies.
InnoVen Capital is not the only player in the segment. There are other debt financing firms such as Mumbai-based Innoven Capital, Gurgaon’s Trifecta Capital, and Alteria Capital, among others.
In November last year, the segment observed the arrival of early-stage startup investor Unicorn India Ventures, joining the debt financing industry with the launch of a $94 million debt fund. Unicorn India will use the corpus to back around 10 startups across several sectors.
Experts believe that after a long haul of all-equity only deals, Indian startups need to add debt to the mix.
Venture-debt financing provides growth capital to extend the cash runway of a startup while minimising equity dilution.