Venture Capital: As The Indian VC Scene Heats Up Alteria Raises $177M Venture Debt Fund

April 9, 2021 | News, Venture Capital
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This was Alteria’s second fund to provide loans to startups.

Alteria Capital, an Indian venture debt fund, announced today its first close of a ₹ 1325 crore (US$ 177.41 million) fund targeting start-ups looking for loans, not capital. The firm has a target of ₹ 1700 crores (US$ 227.62 million) expected to be raised within the next 3 to 4 months. (Money Control)

Alteria was able to raise the money much faster than expected (“100 days of Zoom calls with over 200 investors”) according to Vinod Murali, co-founder and managing partner. Reportedly, the fund was heavily oversubscribed within four months.

Indian venture scene picking up speed

The speed of the raise shows the almost frenetic conditions building up in the Indian start-up funding scene. It also points to another healthy trend – domestic investors are eyeing venture capital or debt opportunities seriously.

Investors in Alteria’s latest fund, its second, included family offices, institutions, and high net worth individuals, and were all drawn from within India.

“Lots of people have moved from curiosity to action,” Murali said to Money Control. “They want to play in this space and this looks like an inflection point for domestic capital in India.”

Alteria Capital – Venture debt model

Indian start-ups usually raise venture debt at an interest rate of about 12 – 14% and a tenure of 2 to 4 years. They usually pay back the venture debt once their business models are established and they are able to raise venture capital.

Venture debt funders often also get a very small equity stake or warrants in fast-growing start-ups.

What about debt risk? Alteria has had an impeccable record with its first fund – despite the pandemic last year, all portfolio companies paid in their commitments.

Alteria Capital II will invest in start-ups in the early and growth stages in tranches of up to ₹ 150 crores.

On an aggregate basis, across both its funds, Alteria Capital has a pool of ₹ 2300 crores.

It is presently the largest venture debt provider in India.

Related Story:  India’s ShareChat Scores $502M Raise From Top Investors

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