Alteria Capital Secures Oversubscribed ₹1.55 Billion Fund for Venture Debt, Highlighting Growing Startup Demand
Alteria Capital Scores Big: Venture Debt Fund Soars Past Target with ₹1.55 Billion Close 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.
Alteria Capital Scores Big: Venture Debt Fund Soars Past Target with ₹1.55 Billion Close
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, a significant advantage in earlier funding rounds. The second scheme, currently under subscription, addresses the shorter-term working capital needs of startups (typically under 18 months). This scheme might be used to finance inventory purchases, customer receivables, or even marketing campaigns. 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 at various stages of growth.
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 returns compared to traditional fixed-income options, while still providing some buffer against downside risk compared to direct equity investments. 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 successful deployments likely played a role in attracting further investment.
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. 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.” This can be particularly beneficial for fintech startups that require capital to disburse loans to their own customers.
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. Some startups might require a larger loan to finance product development over a longer period, while others might seek a smaller, short-term loan to bridge a temporary cash flow gap. Alteria’s approach provides flexibility for founders to access the capital they need without compromising their long-term financial strategy.
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. By providing alternative funding options, Alteria Capital is helping to bridge the funding gap for high-growth startups and fostering a more robust entrepreneurial environment 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. Venture debt can provide the crucial runway startups need to refine their products, expand their market reach, and ultimately achieve long-term success.
