The company is eyeing first close of Stride Ventures India Fund II, which will invest in early to late-stage startups, within the next three months.
“Ticket size from the new fund is expected to go up to Rs 70 crore,” the company said in a statement. “The new fund will have a commitment period of four years, within which the capital will be deployed and recycled. With its ability to recycle capital, Stride will effectively have more than Rs 3,000 crore for funding startups through venture debt and offer multi-faceted credit solutions to its portfolio companies.”
The new fund will look to invest primarily in sectors such as business-to-business commerce and software, and consumer, healthcare, financial and agriculture technology.
The cash will be raised from large family offices, sovereign funds, private equity funds, insurance firms, and high net-worth individuals (HNIs) in India, Singapore and the Gulf Cooperation Council (GCC).
“As founders become increasingly aware about debt and alternative capital for non-dilutive structures, our deployments have grown considerably as we partner with fundamentally strong companies,” said Ishpreet Gandhi, founder and managing partner, Stride Ventures.
“Despite the pandemic, our fund has served as a good diversification for our investors’ asset allocation, having continued to post strong and consistent returns,” he said. “We have seen great interest from all our existing investors and are looking at onboarding new investors as well for Fund II.”
Founded in 2019, Stride Ventures has from its first fund invested in more than 20 startups, including Pocket Aces, Miko, Sugar Cosmetics, Infra.Market, Spinny, HomeLane, Zetwerk and Bizongo. “With zero delinquencies, the first fund is on track to deliver its target IRR of 18-19%, notwithstanding the economic disruption due to Covid-19,” the release stated.
The concept of venture debt is achieving wider acceptance in India, with an increasing number of domestic investors willing to back them.
A venture debt fund lends money to startups alongside equity investors. Since most banks do not lend to loss-making startups and have a prerequisite for collaterals, venture debt is most sought after by the startup ecosystem. These loans generally come with a tenure of 24 to 36 months—hence it becomes easier for the fund to rotate capital more efficiently, resulting in higher lending capacity.
Stride Ventures aside, other venture debt funds too are raising larger funds this year. In April, Alteria Capital said
it has raised Rs 1,325 crore towards the first close of its second fund that’s targeting a total corpus Rs 1,500 to Rs 1,700 crore by September. In March, Trifecta Capital said
it has received investor commitments worth Rs 1,025 crore towards the final close of its second fund.