InnoVen Capital India invested Rs110 crore (about $16 million) in the December quarter across 13 companies, including food ordering and delivery start-up Swiggy, furniture rental start-up Furlenco and online insurance provider Coverfox, a top executive at the venture debt company said.
Backed by Singapore’s state-run investment arm Temasek Holdings Pte Ltd, InnoVen Capital also invested in Universal Sportsbiz, XpressBees, Surewaves, K12 Techno Services, Koye Pharma, Capillary Technologies, Unbxd, Zelo, Flyrobe and Chai Point during the period.
“There are many reasons why 2017 will be better than 2016 from a venture debt perspective. We’ve funded more than 90 companies; hence, there is that much more talk about venture debt and more use cases and broader acceptance,” said Vinod Murali, managing director, InnoVen Capital India.
InnoVen did not disclose the quantum of investments in individual companies, but it has invested about $5 million in Swiggy, said two people aware of the matter on the condition of anonymity.
InnoVen, which has previously invested in Yatra, Practo, Snapdeal and Oyo Rooms, had deployed about $20 million in the September quarter and about $12 million each in the June and March quarters. According to Murali, InnoVen invested about Rs400 crore in 35 Indian start-ups in 2016—a 48% increase in deal value from Rs275 crore invested in 27 start-ups, signalling a growing appetite for venture debt among Indian start-ups as VC firms become increasingly cautious about their bets.
Among the 35 investments, 26 were new investments, making InnoVen one of the most active funds of 2016.
Interestingly, not only early-stage companies, but even mature start-ups such as Byju’s, Urban Ladder, Swiggy and Oyo, which have raised $75-160 million from venture capital firms, too have opted for venture debt.
According to Murali, start-ups are increasingly warming up to venture debt to not only meet working capital needs but also partially fund acquisitions.
“In 2017, there will be more of a focus on business to business start-ups. There are areas which are evolving, say around the artificial intelligence and virtual reality, but we are still watching which all companies are breaking out and getting traction. We also focus on the rental piece,” he added.
Venture capital debt providers lend Rs5-25 crore per transaction to start-ups at an interest rate of 15-17%. They enter only after start-ups have secured at least one round of funding from venture capital firms.
InnoVen, which typically invests $500,000-$5 million per transaction, is looking to move out of practice. It plans to invest up to Rs50 crore in Indian start-ups and as much as $15-20 million in overseas start-ups, besides investing in start-ups which have stayed away from raising funds from venture capital firms.
“We have also started doing non-venture backed deals for new age businesses who have chosen not to take money from venture capital firms. It wasn’t core to our business model. We wanted to make sure that our core competency is being taken care of and we do more of them (funding venture capital-backed start-ups). But, if there are companies in a model or segment which is not very easy to replicate and we find them doing a good job, we are up for it,” Murali said.
InnoVen has placed a similar bet on mobile marketing platform Affle, he added.
Trifecta Capital, another venture debt firm, has raised more than Rs200 crore from investors including RBL Bank Ltd, while IntelleGrow raised about Rs134 crore from Developing World Markets and Omidyar Network.