Alteria announces final close of second venture debt fund at Rs 1,800 cr

Alteria Capital has announced the final close of its second venture debt fund at Rs 1,800 crore. Alteria Capital II is the largest venture debt fund raised in India till date. Alteria Capital now has an AUM (assets under management) of Rs 2,750 crore across two venture debt funds, raised from domestic investors. This is the largest pool of debt capital available for startups in India.

Alteria Capital received approvals from Sebi in December 2020 for its second venture debt fund with a target corpus of Rs 1,000 crore. There has been strong interest from domestic investors to participate in this attractive asset class resulting in significant oversubscription in a very short period of time.

The fund had demand for 2x of the base target and has closed at Rs 1,800 crore. The investor mix includes domestic institutions, large family offices as well as senior corporate professionals and venture capitalists and founders from the startup ecosystem.

The fund promoted by veterans Ajay Hattangdi and Vinod Murali will use the capital to back start-ups that have already raised VC funding and provide them with a range of specialty debt solutions.

“This fund has been raised completely on Zoom, from domestic investors, reflecting the massive growth in appetite in India for investment into alternative assets,” said Vinod Murali, co-founder and managing partner, Alteria. “There is a lot more credible data on performance and the stable, consistent performance coming out of the venture debt asset class is being appreciated by the Indian investor base.”

The fund will target startups in early and growth stages with cheque sizes up to Rs 200 crore. There will also be an allocation for structured debt products aimed at later stage companies which have a differentiated risk profile.

“Our model which focuses on extending patient capital with product flexibility and optimal risk-adjusted returns has resonated well with investors and also gained us a wonderful set of entrepreneurs and portfolio companies,” said Ajay Hattangdi, co-founder and managing partner, Alteria.

Alteria has done over Rs 1,000 crore worth of deals in the first nine months of 2021. The second fund has already drawn down 35 per cent of capital and funded more than 20 companies. The firm hopes to deploy more than $175 million in 2021 across both funds which is a reflection of the rapid growth of the Indian entrepreneurial ecosystem. Some of the larger portfolio companies include Rebel Foods, BharatPe, Infra Market, Spinny, Cars 24, Mensa Brands, Dealshare, Zest Money, Dunzo, Toppr and Stanza Living.

Punit Shah, partner, Alteria Capital, said with an evolving and maturing ecosystem, debt as a means of capital has evolved within the founder community with strong data points. These reflect savings on dilution and better RoE (return on equity) all for stakeholders.

Alteria Capital Fund II will be the largest pool of alternative debt capital available for early and growth-stage start-ups in India. With its ability to recycle capital, Alteria will effectively have over Rs 5,000 core available for funding start-ups across venture debt and structured solutions.

“Apart from existing LPs, we were enthused to see active participation from first-time investors who have never invested in the startup ecosystem in any form before,” said Ankit Agarwal, partner, Alteria Capital.