vinodTemasek-backed and Mumbai-based venture debt provider InnoVen Capital is planning to expand operations from India to other Asian markets, with Singapore slated to be its first overseas destination.
This comes amidst an increase in its operational tempo in India as it increases funding to India-based startup ventures.
The non-banking financial company (NBFC), which was formerly known as Silicon Valley Bank India, was acquired by Temasek earlier this year (April 2015) for $48.1 million and rebranded to Innoven Capital.
It is expected to expand to Singapore, prior to entering the major emerging markets of Indonesia and the Philippines. Innoven invests from its own balance sheet and has earmarked extending credit of up to $50 million for 2015/2016.
“Indian continues to be the growth engine for InnoVen Capital since it has a much more vibrant startup market, but our expansion is a natural progression of our growth,” said Vinod Murali, managing director of InnoVen Capital, in an interaction with the Economic Times.
To date, Innoven Capital has conducted 85 transactions and extended credit of up to $120 million, backing Indian startups like Greendust, Practo Technologies, Zoomcar and Faasos. 1H 2015 has seen it funding 13 ventures, with two more slated for public disclosure in the near future.
It recently lent to online recharge platform and mobile wallet provider MobiKwik and online test prep startup Embibe. InnoVen lent $2 million to MobiKwik three months after MobiKwik closed a $25 million funding round, led by Tree Line Asia, Cisco Investments, American Express and Sequoia Capital. Imbibe was loaned $500,000.
Murali said,”Close to a third of our transactions are with companies that have borrowed from us before. We come in after an equity round, with the trigger being a Series A round. There’s a lot of headroom to grow, but green shoots are coming through now.”
By and large, venture debt has lagged behind equity financing in India and other Asian markets, with only a few firms offering venture debt financing to startups. Indian startups generally use debt financing to fund working capital requirements, expansion and acquisitions.
In an Economic Times report, Vijay Shekhar Sharma, founder and CEO of mobile payments and commerce platform Paytm explained: “It’s about cash flow management. Venture debt acts as bridge funding, and can be a great asset to companies that may not be able to offer assets as collateral.”
With a target of 30 deals for 2015, their expansion into the untapped Southeast Asian market is likely to broaden the deal flow.
Another venture debt businesses emerging as a competitor is Trifecta Capital. Trifecta was founded by Rahul Khanna, formerly of venture capital firm Canaan Partners, and Nilesh Kothari, who headed Accenture’s M&A unit.