Temasek-owned InnoVen Capital has struck deals worth Rs 82 crore in the first quarter of the current fiscal, as the venture debt firm looks to make deeper inroads into Asia’s third-largest economy and rapidly-maturing startup ecosystem.
InnoVen Capital, which is also backed by Singaporean multinational banking organisation United Overseas Bank, has provided venture debt financing to XpressBees, the logistics business spun out of baby and maternity products retailer First-Cry, on-demand home services provider Housejoy and online aggregator of hotel rooms and home stay, Stayzilla.
It has also provided loans to peer-to-peer money transfer and recharge app Chillr, professional certification training company Simplilearn, big data and analytics company Manthan, public transportation app Ridlr and primary speciality care drug maker Koye Pharmaceuticals, according to Vinod Murali, Managing Director, InnoVen Capital.
“Financial year 2016-17 has started off very strongly. Our pipeline is almost at $20 million in term sheets at this point in time… We’re feeling very good about where we are today,” Murali
The companies, some of which are part of the venture debt firm’s current portfolio, have all raised significant amount of funding from leading venture capital and strategic investors, including Amazon, Paytm, Sequoia Capital and Matrix Partners.
A significant number of the debt finance transactions cited above have been either structured along side, or followed, equity financing rounds raised by the companies over the past six months.
According to Murali, the venture debt firm, which was formerly known as SVB India Finance, before being acquired by Temasek for about Rs 300 crore last year, and then rebranded, expects to disburse loans of about $60-$70 million in the country by the end of the current fiscal.
“I expect the forthcoming quarters to be better than this one. Companies that have raised a significant amount of equity financing, are still very keen to take on a layer of venture debt From a founder’s perspective this (venture debt) is a very useful instrument to have, because it preserves valuation,” the InnoVen Capital MD said.
This is also the second successive quarter in which Mumbai-headquartered InnoVen Capital has closed deals upwards of Rs 80 crore.
For the fourth quarter of fiscal 2016, the venture debt firm had struck transactions worth Rs 87 crore, having provided financing to leading startups, such as test preparation firm Byju’s and on-demand logistics provider Shadowfax, among others.
Innoven Capital typically lends to startups that have raised at least between $3 and $5 million in funding, preferably from one of the venture capital firms it works with. It lends at an interest rate of 15%, with loan tenures ranging from 2-3 years, and does not accept the personal guarantees or the assets of the founders.
However, if any portfolio company gets acquired or decides to make its public market debut, the venture debt firm will be in line for additional compensation that kicks in as a net settlement for the firm.
The acceleration in deal flow also comes at a time when venture capital transactions, across stages, have seen a sharp slump, as investors continue to tighten their purse strings and reposition their portfolios.
According to data collated by VCCEdge, venture capital deal volume dropped to 180 transactions in the first six months of 2016, down from 279 deals in the corresponding year-ago period.
Additionally, VC deal values have also plunged to $992.6 million over the first six months of the new calendar year, compared with deals worth $2.9 billion that were struck in the first half of 2015.
Source: Economic Times
