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