Stride Ventures, which has backed the likes of HealthifyMe and Mensa Brands, on Tuesday said it has hit the first close of its third venture debt fund at $100 million with a target to finally close it at $200 million.
The firm, which has invested in over 100 startups across two funds, hit the first close within four months of receiving the licence for the third fund.
The first two funds witnessed participation from leading banks, marquee family offices, corporate treasuries, sovereign funds, PE funds, insurance firms, and HNIs.
Stride Ventures secured the final close of its second fund in August at $200 million.
Its portfolio companies span the consumer, fintech, agritech, B2B commerce, healthtech, B2B SaaS, mobility, and energy solutions sectors and include Zepto, BluSmart, Uni, WayCool, MediBuddy, Wiz Freight, Perfios, and Groyyo.
As the access to equity slows down during the funding winter and valuation multiples sober up, Indian startups are increasingly turning to venture debt to meet their working capital needs. Capital investments in the form of debt infusion in Indian startups touched $1.7 billion in Jan-Oct 2022, recording a growth of about 24% over the corresponding period last year, show proprietary data compiled by DealStreetAsia.
Apoorva Sharma, Managing Partner at Stride Ventures, said the firm is seeing a growing demand for venture debt as startups look to optimise their capital structure and preserve equity for future rounds.
To meet the growing demand for venture debt, many firms such as BlackSoil, Edelweiss Wealth Management, Alteria Capital, Vivriti Asset Management, and Anicut Capital have launched new vehicles in the past few months.
Earlier this year, Ankur Bansal, the founder of BlackSoil, which has backed Indian unicorns such as OYO and Spinny, told DealStreetAsia that the ‘funding winter’ has opened up opportunities for alternative credit as it provides the necessary runway through working capital solutions, acquisition financing, and other short-term funding requirements without impacting the overall captable and underlying valuations of a startup.
A recent report by BCG shows Indian venture debt investment has grown rapidly at 22% CAGR in the last three years to clock nearly $1 billion as of CY22. This is projected to grow 8X to reach $6-7 billion by CY30.