The lender expects the market to grow strongly in the current year driven by many tailwinds.
“The market for venture debt continues to be vibrant with more companies using it for different use cases, whether it’s runway extension, growth investments, capex or working capital. Last year, the venture debt market was ₹1,200-1,300 crore and we expect it will grow 25-40% this year," said Ashish Sharma, chief executive at InnoVen Capital, in a phone interview.
InnoVen has been quite bullish in investing in startups, and is looking to increase its pace of deployment. It has already made 14 investments so far this calendar year and expects to close another four to five investments by June, Sharma said.
Most recently, InnoVen invested $1.6 million in Phasorz Technologies Pvt Ltd, which operates DocsApp, a doctor consultation app. DocsApp helps patients across India connect and talk to specialist doctors, for online consultations over video calls, voice calls and an in-built chat application.
InnoVen’s portfolio consists of early to growth stage companies, across sectors, including those such as Swiggy, Oyo and Byju’s. Most of its investments centre toward consumer-centric firms since these need more capital and tend to spend a lot more money on growth and user acquisition. However, a slew of recent big equity deals in business-to-business startups, in freight logistics provider BlackBuck, and software provider Freshworks among others, may be changing this.
“While we are stage and sector agnostic, the proportion of B2B has increased, whether it be logistics, enterprise tech, B2B platforms, robotics etc. However B2C businesses will still raise more venture debt than B2B, as their capital requirements are higher," according to Sharma.
InnoVen Capital entered India in 2008 as the first dedicated venture debt provider in the country. The firm was then part of US-based Silicon Valley Bank. In January 2015, Singapore’s state-owned investment firm Temasek acquired the Indian venture debt business of Silicon Valley Bank for around ₹280 crore.
The platform, now present across India, China and South-East Asia, offers multiple debt capital solutions, including venture debt, acquisition finance, growth loans, and syndication.
The venture debt market in India is dominated by a handful of investors such as InnoVen, Alteria Capital and Trifecta Capital. Alteria Capital was launched in 2018 by former InnoVen Capital executives Ajay Hattangadi and Vinod Murali. While Alteria is currently raising its ₹1,000 crore maiden fund, Trifecta is raising a ₹750-crore second fund. Trifecta had launched its first venture debt fund in 2014.