Unicorn India Ventures, the venture capital fund headed by M. Damodaran, former chairman of Securities and Exchange Board of India, has launched a Rs 600 crore venture debt fund to provide debt financing to startup companies.
There are many funds that provide equity funding to startup firms. However, high levels of founder stake dilution, uncertain exit scenarios and banks providing limited finance, have made debt financing the need of the hour for startup ecosystem, said Bhaskar Majumdar, managing partner, Unicorn India Ventures.
The SEBI registered fund, plans to invest in about ten ventures in a year, with an average ticket size of about Rs 20 crore.
“While, there has been a lot of venture equity activity over the last few years, startups are still starved of funds for growth. The capital structure of funds is lopsided with hardly any debt. We believe, it is the right time to launch a venture debt fund, as this asset class will sit alongside traditional venture equity,” said Damodaran, chairman of Unicorn India Ventures.
The market for venture debt has picked up in recent times. Mumbai-based IvyCap Ventures recently said it was planning to launch a Rs 500 crore venture debt fund. In September, online travel portal Yatra raised about Rs 100 crore in venture debt from InnoVen Capital.
This debt fund launched by Unicorn will be its second fund launch. The company had earlier launched a venture equity fund in 2015, which has invested solely or as a co-investor in startups, with deal size varying from $250,000 to $2 million.
Some of the companies that Unicorn's first fund has invested in include Boxx.ai (Bengaluru-based artificial intelligence backed analytics company), GrabonRent (an online product rental platform) and NeuroEquilibrium (a Jaipur-based healthcare startup for vertigo and balance disorders) among others.
