With .₹ 87-cr Startup Deals, In­noVen Makes Its Mark

The Economic Times - - Disruption: - Biswarup.Gooptu @times­group.com

New Delhi: Te­masek-backed In­noVen Cap­i­tal has struck deals worth .₹ 87 crore, hav­ing signed ven­ture debt trans­ac­tions with a num­ber of lead­ing In­dian star­tups, in­clud­ing test prepa­ra­tion firm Byju’s and on-de­mand lo­gis­tics provider Shad­ow­fax.

The spe­cial­ity finance firm, which is also backed by Sin­ga­porean multi­na­tional bank­ing or­gan­i­sa­tion, United Overseas Bank, has also pro­vided ven­ture debt fi­nanc­ing to cloud soft­ware so­lu­tions com­pany Cap­il­lary Tech­nolo­gies, on­line gro­cery store ZopNow, di­ag­nos­tic chain Sub­ur­ban Di­ag­nos­tics, ad-tech ven­ture Af­fle, per­son­al­i­sa­tion-fo­cused fash­ion mar­ket­place Voonik and used ve­hi­cles mar­ket­place Credr.

“We are see­ing a lot of dou­bling down take place. A lot of com­pa­nies are rais­ing fresh cap­i­tal, and there­fore, are now ac­tively rais­ing ven­ture debt as part of the round, or im­me­di­ately af­ter,” said Vinod Mu­rali, MD, In­noVen Cap­i­tal. 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 pri­vate eq­uity firms, in­clud­ing, Se­quoia Cap­i­tal, Ac­cel Part­ners, War­burg Pin­cus and Eight Road Ven­tures, which was for­merly known as Fi­delity Growth Part­ners.

The lat­est spate of deals come soon af­ter the Mum­bai-based spe­cial­ity debt firm an­nounced it had com­pleted 100-plus trans­ac­tions in the coun­try, while also clos­ing its de­but deals out­side its do­mes­tic mar­ket of In­dia, in Malaysia and Thai­land.

“There’s value in ven­ture debt even if there is a large eq­uity round. This is also a tes­ta­ment to our strong re­la­tion­ships with our port- fo­lio com­pa­nies,” ex­plained Mu­rali. Given its ac­cel­er­ated deal flow, In­noVen Cap­i­tal, which had ear­lier forecast dis­bur­sals of of $65 mil­lion (about .₹ 432 crore) in 2016, could now end the new fi­nan­cial year with dis­bur­sals of up to $75 mil­lion (about .₹ 500 crore), ac­cord­ing to Mu­rali.

“The pipeline is very strong. We are look­ing at com­plet­ing 35-40 trans­ac­tions over the next 12 months. Founders are look­ing to raise cap­i­tal now, so that they don’t have to raise money later, while on the back foot,” said Mu­rali.

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.

In­noVen Cap­i­tal, which has pro­vided debt fi­nanc­ing to about 70 com­pa­nies, counts a num­ber of lead­ing In­dian star­tups among its port­fo­lio, in­clud­ing, Snapdeal, Freecharge, Myn­tra and Practo.

In April last year, Te­masek ac­quired SVB In­dia Finance for about .₹ 300 crore, and re­branded it as In­noVen Cap­i­tal. Later in July, it was re­ported that Union Overseas Bank was in the process of pick­ing up a 50% for an undis­closed amount. Both back­ers have com­mit­ted to pro­vide paid-up cap­i­tal of about $200 mil­lion in the firm.

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