Venture debt funding jumped by 72% to $215 Mn in 2019

The Indian startup ecosystem witnessed a funding boom in the last 3-5 years and venture debt’s contribution in fueling the funding spree has increased considerably with a whopping growth of 72% in deployment by specialized firms.

Venture debt funds raised by local startups soared to $215 million in 2019 from $125 million in 2018, as per Venture Intelligence data.

In 2017, Indian startups managed to rake in $91 million across 35 deals and gathered $63 million and $38 million from 63 deals in 2016 and 2015 respectively. Collectively, in the last 5 years, over $530 million in debt has been deployed across around 234 deals. 

The venture debt market, which has gained traction in the last decade, has been majorly dominated by the likes of Alteria Capital, Innoven Capital, and Trifecta Capital. Some of the renowned companies supported by these firms are Paytm, Rivigo, Urban Company, Cure. Fit, CarDekho, BigBasket, Swiggy, Oyo, PharmEasy, Dunzo, Cars24, NoBroker, and others.

In 2019, these debt firms have deployed around $215 million across growth-stage startups. In July last year, BigBasket picked up Rs 100 crore as debt from Trifecta, whereas Alteria Capital put Rs 80 crore in Lendingkart at the same time. Some notable debt funding rounds include task management firm Dunzo and health-tech company mFine who raised over Rs 30 crore respectively.

The demand for debt funding has continued in 2020 as well. Companies such as fashion brand FabAlley raised Rs 8 crore from Trifecta, while Dunzo cornered $11 million. Cloud-kitchen major Rebel Foods secured Rs 35 crore from Alteria followed by Rentomojo which raised Rs 15 crore.

Founders favor venture debt as it provides growth capital to extend the cash runway while minimizing equity dilution. Apart from existing venture debt funds, a host of new funds are coming up to cater to the growing demand. 

Mumbai-based IvyCap Ventures, Stride Ventures, Ankur Capital, and Unicorn India Ventures are eyeing to create debt funds. Sachin Bansal’s Navi Technologies had also done a few venture debt deals last year including Rs 20 crore in consumer audio brand boAt and Rs 10 crore in Bounce.