India’s venture debt (VD) market soared to new heights in 2023
Indian Start-ups Secure $1.2 Billion in Venture Debt in 2023, Fueled by Fintech and Consumer Sectors
According to the findings, approximately 190 start-ups participated in this surge, reflecting a Compound Annual Growth Rate (CAGR) of about 34 per cent from 2017 to 2023. Notably, the consumer and fintech sectors emerged as frontrunners in both deal volume and total funding raised. Fintech claimed over 55 per cent of the total investment, with the consumer sector following at around 25 per cent.
Anticipated Trends for 2024
Looking ahead to 2024, the report indicates that clean tech, particularly electric vehicles, is expected to lead in venture debt fundraising, comprising 21.6 per cent of the anticipated activity. Additionally, the consumer and fintech sectors are anticipated to maintain their momentum, constituting 19.5 per cent and 15.8 per cent, respectively.
“This leap signals a shift towards strategic financing, propelling Indian innovation to global prominence. With the market poised to hit $1.8-2 billion by 2026, India’s future in the global startup scene looks not just promising but unstoppable,” noted Ishpreet Singh Gandhi, Founder & Managing Partner of Stride Ventures.
Evolution in Venture Debt Distribution
The report also highlights a notable shift in venture debt distribution, with Pre-Series A to Series C stages receiving 79 per cent of deals and 53 per cent of the investment volume. This trend reflects an evolutionary stride in the use of venture debt, showcasing broader acceptance across various stages of company growth.
Apoorva Sharma, Managing Partner at Stride Ventures, attributes the robust growth in India’s venture debt market to due diligence and the asset class’s promise of resilience and returns. Sharma notes, “India’s venture debt market is swiftly expanding, jumping from $800 million to $1.2 billion of venture debt within a year, highlighting a seismic shift in investor confidence and strategic adoption.”
Integral Role in Funding Landscape
As both founders and venture capitalists increasingly integrate venture debt to balance equity and growth, it becomes central to India’s funding landscape, signifying a pivotal evolution in the start-up ecosystem.
Stride Ventures Leading the Way
Stride Ventures, a sector-agnostic investment firm with a portfolio of over 120 start-ups, including Mensa, Sugar Cosmetics, Perfios, Spinny, Zetwork, Blu Smart, Jupiter, and Slice, remains at the forefront of this transformative trend. The firm anticipates that this surge in venture debt signifies not only investor confidence but also strategic adoption, further propelling India into the global startup spotlight.