Beyond Equity: Alteria Capital’s Venture Debt Bridge for Growth-Stage Startups
Alteria Capital Secures Oversubscribed ₹1.55 Billion Fund for Venture Debt, Highlighting Growing Startup Demand
Beyond Equity Alteria Capital’s Venture Debt Bridge for Growth-Stage Startups Mumbai-headquartered venture debt firm Alteria Capital has concluded a highly successful fundraising round for its third fund, exceeding its initial target of ₹1 billion (USD 12.5 million) to reach a final corpus of ₹1.55 billion (USD 187 million). This achievement underscores the burgeoning demand for debt financing solutions among venture capital-backed startups in the Indian market.
Beyond Equity: Alteria Capital’s Venture Debt Bridge for Growth-Stage Startups
Tailored Solutions: A Dual-Track Approach to Venture Debt
Alteria Capital’s Fund III implements a unique twin-scheme strategy. The first scheme, now closed, focuses on traditional venture debt with a longer investment horizon (typically 18-36 months). This type of financing provides startups with much-needed capital without diluting their equity ownership, which can be crucial for maintaining control during high-growth phases. The second scheme, currently under subscription, addresses the shorter-term working capital needs of startups (typically under 18 months). These funds can be used for a variety of purposes, such as financing inventory purchases, building receivables, or covering operational expenses. This innovative approach demonstrates Alteria’s commitment to providing a comprehensive suite of financial instruments specifically designed to cater to the evolving capital requirements of founders.
Strong Investor Confidence Bolstered by Proven Track Record
The venture debt scheme witnessed significant oversubscription, attracting a diversified pool of domestic investors. This group included prominent institutions, family offices, and seasoned industry professionals. This robust investor confidence reflects the growing acceptance of venture debt as a compelling asset class within the Indian financial landscape. Venture debt offers investors attractive risk-adjusted returns compared to traditional equity investments, while also providing a valuable service to the startup ecosystem by fueling innovation and job creation. Notably, Alteria has already deployed half of the fund’s capital across its established portfolio, which boasts names like OneCard, Rebel Foods, Bluestone, and Ather Energy. These investments demonstrate Alteria’s strong deal flow and ability to identify promising startups with high growth potential.
Bridging the Gap: Addressing Short-Term Working Capital Needs
The upcoming shorter-duration scheme is projected to raise an additional USD 105 million by the end of 2024. This scheme aims to bridge the critical gap for startups facing short-term cash flow mismatches. These mismatches can arise due to seasonal fluctuations in demand, delays in customer payments, or the need to invest in growth initiatives ahead of revenue generation. The shorter-duration scheme’s smaller ticket sizes (ranging from ₹3 crore to ₹100 crore) also cater to earlier-stage startups that may not yet be ready for larger traditional venture debt financing. It will also play a pivotal role in bolstering the lending capacity of fintech companies. As Punit Shah, Managing Partner at Alteria Capital, aptly stated, “The Shorter Duration Scheme is strategically positioned to provide capital to fintech companies, thereby strengthening their on-lending capabilities to a wider pool of borrowers.” This focus on fintech reflects the growing importance of this sector within the Indian startup ecosystem, with many fintech companies themselves relying on debt financing to fuel their loan books.
Meeting the Diverse Needs of Startups
“We continuously learn from our founders to adapt to their evolving capital requirements,” said Vinod Murali, Co-founder and Managing Partner at Alteria Capital. The twin-scheme strategy embodies this philosophy, offering debt solutions with varying tenors, price points, and functionalities to cater to a wider spectrum of startup needs. By providing a financing option that sits between equity dilution and traditional bank loans, venture debt fulfills a critical niche within the startup funding landscape.
India’s Largest Venture Debt Pool: A Position of Leadership
With a total AUM (Assets Under Management) of ₹4.35 billion across its three funds, Alteria Capital currently manages the largest venture debt pool specifically dedicated to supporting Indian startups. This achievement signifies the firm’s established position as a key player in the evolving debt financing landscape for the Indian startup ecosystem. Alteria’s success not only benefits the startups it finances but also fosters the development of a more robust and diversified financing infrastructure for startups in India.
Looking Forward: Fueling Innovation Through Strategic Debt Solutions
Alteria Capital’s successful fundraise serves as a strong indicator of the growing demand for debt financing solutions among Indian startups. The firm’s innovative twin-scheme approach positions it to effectively address this demand by providing founders with flexible and targeted financial tools to navigate their growth journeys. As the Indian startup ecosystem continues its rapid maturation, venture debt is poised to play an increasingly critical role in fueling innovation and propelling the country’s entrepreneurial ventures forward. By offering strategic debt solutions, Alteria Capital is well-positioned to play a key role in shaping the future of Indian startups.