Trifecta Capital announces first close of its third venture debt fund at Rs 750 crore

By Salman SH
Venture debt provider Trifecta Capital on Wednesday announced the first close of its third venture debt fund, ‘Trifecta Venture Debt Fund – III’, after receiving investor commitments of Rs 750 crore within two months of the launch of the Fund.

The fund, with a target corpus of Rs 1,000 crore and a greenshoe option of Rs 500 crore, is the largest in the series of venture debt funds managed by the firm. The fund received strong interest from both domestic and global investors, Trifecta said in a statement on Wednesday.

The venture debt firm said it closed most of its funds via remote fundraising with large interest from banks, insurance companies, development financial institutions, corporates, endowments, and some of India’s largest family offices.

Trifecta Capital aims to serve the fast-growing demand for growth and acquisition financing in Indian start-ups which has seen 35 new entrants to the unicorn club in 2021 alone. India’s start-up sector has already attracted investments worth $35 billion in equity financing in 2021 till date.

Apart from its third debt Fund, the firm also has a presence in equity investing. Earlier this year, the firm had announced the final close and oversubscription of Trifecta Venture Debt Fund – II at Rs 1,025 crore, as well as the first close of its Rs 1,500 crore late-stage equity fund Trifecta Leaders Fund – I.

Trifecta Capital pioneered the nascent asset class of venture debt funds in 2015 with Trifecta Venture Debt Fund – I. This fund is now in its seventh year and claims to have already returned 100% of the capital to its investors. It is now focused on harvesting the capital gains from the equity options that it holds across its portfolio companies.

The venture debt fund model in India has now evolved into an acceptable standard for startup financing and has been widely adopted by every single provider across the industry. The industry itself has grown multi-fold, as the entire startup ecosystem has begun engaging more deeply with a variety of alternative financing options.

To date, Trifecta Capital has committed over Rs 2,700 crore of credit in more than 85 startups across its prior debt funds, and an additional Rs 750 crore of equity financing into seven startups from its equity fund. Its portfolio now has 15 unicorns including brands such as Big Basket, Pharmeasy, Cars24, Infra.Market, ShareChat, Dailyhunt, Urban Company, Vedantu, CarDekho, Blackbuck, Ninjacart, NoBroker, and others. The Trifecta Capital portfolio has cumulatively raised $9.5 billion of equity and is cumulatively valued at $40 billion.

Trifecta’s investment strategy selects market leaders and early category creators. It also focuses on growth financing, with creative mechanisms of risk sharing, working capital financing for inventory and receivables, bespoke capital structured to fund acquisitions, as well as blended financing structures along with participation from banks and NBFCs.

The firm additionally aims to utilise the capital pool to continue backing portfolio companies farther into their growth journey, through multiple follow-on investments and the ability to underwrite larger investments. Focus sectors where the firm plans to enhance participation include emerging sectors with high growth prospects such as SaaS (Software as a Service), D2C (Direct-to-consumer), B2B commerce, Fintech, E-commerce Sellers, etc. Trifecta Capital aims to complete the final close for this fund in Q1 2022

Rahul Khanna, managing partner said, “We are thankful to our investors for their commitments to Trifecta Venture Debt Fund – III. It is rare to raise two Funds in the same year, and we have been fortunate to do it thanks to our investors, our team, our portfolio partners, and our friends from the venture capital industry. We will endeavour to deliver consistent and healthy returns from this Fund as well”.

“Equipped with Venture Debt Fund – III, a customised technology platform offering financial advisory solutions and a late-stage equity fund, Trifecta Capital aims to consolidate its position as an innovator and financial partner of choice for the rapidly growing start-up ecosystem. Over the next two years, we will continue to introduce more interesting products and services to solve large gaps within this ecosystem,” Nilesh Kothari, managing partner said in a statement.