Asset management company Varanium Capital on Tuesday announced the first close of its maiden venture debt fund of Rs 250 crore. The fund will invest in around 100 startups through a mix of revenue-based financing and traditional venture debt. The fund has secured an anchor investor and has received commitments from family offices, ultra-high-net-worth individuals (UHNIs), and entrepreneurs including former CEOs and CXOs of banks.
The debt fund will be managed by Nawal Bachhuka, principal at Varanium Capital and ex-senior management team of IndusInd Bank including former CEO Romesh Sobti, former CRO KS Sridhar, former head of corporate lending Suhail Chander and former COO Paul Abraham. The investment committee will comprise Varanium Group founder TS Anantakrishnan, venture capital partner Aparajit Bhandarkar, Suhail Chander, and KS Sridhar.
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“Venture debt fund will provide financial backing to startups in sectors such as D2C (Direct-to-consumer), SaaS (Software as a Service), B2B commerce, and fintech who require to scale their operations,” said TS Anantakrishnan, Founder, Varanium Capital in a statement.
The fund will also have a green shoe option of Rs 50 crores, he said. The green shoe option allows investment funds to raise capital beyond the original target corpus with interest shown from investors to back the fund. Varanium manages around $1 billion of assets across the asset classes including structured debt, portfolio management services (PMS), and venture capital fund.
Varanium Capital’s fintech-focused equity fund has backed 12 startups including Easebuzz, Riskcovry, Finvu, and Homeville.
The close comes amid prevailing funding winter in the startup ecosystem and investors and startups looking at alternative channels of capital flow. Stride Ventures, Innoven Capital, Alteria Capital, and Trifecta Capital are among the venture debt funds in India.
According to the India Venture Debt Report 2023 by Stride Ventures, $800 million in venture debt was disbursed in 120-130 companies across 170-180 deals in 2022 in India. In comparison, $538 million venture debt was disbursed to startups in 2021. The fintech sector had recorded the maximum number of venture debt deals with 31 per cent share followed by 18 per cent deals in consumer space and 10 per cent in the retail technology segment. 51 per cent of venture debt amount in 2022 was deployed in Series D and beyond deals.