Unlike 2016, the year 2017 saw many large companies such as Shopclues, BigBasket, and Swiggy going the venture debt way.
Venture debt funding in India saw a marginal increase to USD 62.7 million in 2017, as against USD 58 million in 2016, according to data tracker Tracxn.
Unlike 2016, the year 2017 saw many large companies such as Shopclues, BigBasket, and Swiggy going the venture debt way.
While Shopclues was reported to have raised about USD 7.73 million from Innoven Capital, BigBasket raised USD 6.93 million from Trifecta Capital.
Swiggy, on the other hand, raised USD 5 million from Innoven Capital.
According to Tracxn, 2017 saw 27 rounds of venture debt funding, as against 26 rounds in 2016.
InnoVen Capital, one of the biggest venture debt firms in India, disbursed USD 75 million in 2017 to various companies, reporting a 25 percent year on year growth.
Venture debt funds have gained importance over the last couple of years, with startups mostly raising funds to meet specified operational targets, unlike a venture capital or equity fund, which is majorly raised to prepare a war chest and to meet long-term goals.
Companies such as Unicorn India Ventures, which have conventionally remained equity investors, have also announced their plans to foray into venture debt because of the rising interest in the market.
Unicorn India Ventures has announced plans to start a USD 93 million debt fund to target startups at the Series A stage.
Many a time, venture debt is also seen as a bridge-round to achieve operational targets, after which it becomes easy for companies to raise equity.
Interestingly, Swiggy and BigBasket saw equity rounds soon after they raised venture debt.
Last month, Swiggy announced that it raised USD 100 million from South African media company Naspers and Chinese internet firm Meituan-Dianping. BigBasket too raised USD 300 million in a round led by Alibaba Group Holding in February.
The venture debt market is, however, still at a nascent stage in India as compared to the market in the US. According to Tracxn, US saw USD 1.56 billion invested across 70 rounds by venture debt companies in 2017.