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According to a recent report from Stride Ventures, India’s venture debt market crossed the $1.2 billion and $1 billion mark last year, with growing confidence from founders, venture capitalists, and investors encouraging deals in this space. It is said that it was promoted.
This surge, accounting for around 175-190 deals, reflects a compound annual growth rate (CAGR) of around 34% from 2017 to 2023, making venture debt a fast-growing part of the Indian financial landscape. The report states that this is an asset class.
There is also a growing preference for one-stop debt solutions that simplify startup funding and financing packages, reflecting the maturation of the market and the increasing sophistication of venture debt solutions tailored to corporate needs. he added.
“This breakthrough marks a shift towards strategic funding and propels Indian innovation to global prominence.The market is expected to reach $1.8 billion to $2 billion by 2026, leading India’s future in the global economy is not only promising but also looks unstoppable,” said Ishrit Singh Gandhi. Founder and Managing Partner of Stride Ventures.
In India, fintech dominated the VD industry with over 55% of the total investment, while the consumer sector came in second with around 25.56% investment.
Indian venture debt space
Some of the prominent venture bond companies in India include Stride Ventures, Trifecta Capital, Alteria Capital, and InnoVen. Founded in 2019, Stride Ventures has made more than 100 investments in more than 15 sectors including consumer internet, fintech, SaaS, and B2B. The company has launched three funds so far. Its portfolio includes Spinny, Sugar Cosmetics, Inframarket, and more. Another prominent firm, Alteria Capital, has startups such as his Dunzo, Country Delight, and Curefoods in its portfolio.
Venture debt hasn’t been the go-to option for startups for many years. How has it changed?
“Venture debt is increasing rapidly in the Indian startup industry, making venture debt a great solution for fast capital infusions for startups in their growth stages. “Founders who feel that they are creating value will survive,” said Mitesh Shah, partner at Fisis Capital. Ta.
During the Entrepreneur 2023 Summit panel discussion on “Bond Financing – The State of the Venture Debt Market,” Vikram Gupta, founder and managing partner of IvyCap Ventures, said, “As equity investors, we Investments are expected to be made in the 12th period.” Seats are offered by various venture debt funds. It is important to see what makes one different from the other. And they are building their own differentiation strategies. They bring a very different kind of value to the table, which is good for the ecosystem as entrepreneurs mature and know who to choose as partners, and it only adds up. ”
The reason for its growing popularity is the general rise of the startup ecosystem. As more and more startups reach growth or later stages, venture debt is coming to the fore. “Venture debt funds, conducted concurrently with or after equity rounds, broadly deliver returns in the high teens for investors, with about two-thirds of returns coming from bonds.
Investors are choosing venture debt as an asset class because of lower return volatility and the potential for equity kickers to outperform, with the potential for much higher upside,” BlackSoil Co. said Ankur Bansal, Founder and Director.
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