Livemint: July 06, 2016
Bengaluru: InnoVen Capital India, a venture debt firm backed by Singapore’s sovereign wealth fund Temasek Holdings Pvt. Ltd, has loaned around $12 million to eight start-ups in the June quarter, said a senior company executive, signalling that venture debt is becoming popular with start-ups looking to meet their working capital requirements.
Between March and June this year, InnoVen loaned money to logistics firm Xpressbees (Busybees Logistics Solutions Pvt. Ltd), home services company Housejoy (Sarvaloka Services On Call Pvt. Ltd), mobile payment app Chillr (Backwater Technologies Pvt. Ltd), education technology start-up Simplilearn Solutions Pvt. Ltd, hotel aggregator Stayzilla (Inasra Technologies Pvt. Ltd), public transport information provider Ridlr (Birds Eye Systems Pvt. Ltd), data analytics firm Manthan Software Services Pvt. Ltd, and Koye Pharmaceuticals Pvt. Ltd, which manufactures and sells healthcare products.
In April 2015, Temasek Holdings acquired the Mumbai-headquartered SVB India Finance for an estimated Rs.300 crore, and renamed it InnoVen Capital.
“Our investment outlook remains optimistic. We are seeing companies keen on taking a layer of venture debt along with equity, largely because there is a fair level of apprehension in diluting equity. Start-ups want to shore up as much liquidity as possible and push out the next fund-raise as late as possible,” said Vinod Murli, managing director, InnoVen Capital India.
The company aims to disburse about $60-65 million in venture debt in 2016. It typically loans money to companies that have raised at least one round of funding from venture capital firms. InnoVen charges an interest rate of about 15% from the investee companies per annum.
Its average loan is around $2-2.5 million, but Murli said it could sometimes lend as much as $4-5 million.
In 2015, InnoVen loaned Rs.275 crore to 27 start-ups.
As equity funding dries up, India’s start-up ecosystem has seen the emergence of a business opportunity for firms in the venture debt business, Mint had reported on 17 February.
Trifecta Capital, another venture debt firm, has raised more than Rs.200 crore from investors including RBL Bank Ltd, while IntelleGrow raised about Rs.134 crore from Developing World Markets and Omidyar Network.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.