Venture debt firm Alteria Capital readies new Rs 1,000-crore fund

Greenshoe of Rs 750 crore over target corpus likely if demand persists

Venture debt company Alteria Capital will be raising a second fund of Rs 1,000 crore, with a green-shoe of Rs 750 crore, said the firm’s top executive.

The venture debt fund, which has invested in over 30 start-ups so far — such as Dunzo, Rebel Foods, Lendingkart, Zestmoney, Portea, and Toppr — has already received an approval from capital markers regulator Securities and Exchange Board of India, and is expected to have the first closure by the end of the March 2021 quarter.

“Through this fund, we will target start-ups across early and growth stages with cheque size up to Rs 150 crore. There will also be an allocation for structured debt products aimed at later-stage firms that have a differentiated risk profile,” said Vinod Murali, co-founder and managing partner of Alteria Capital Advisors.

It is targeting investments in at least 50 technology, consumer, and health care start-ups from this fund, which has a deployment period of four years.

The company has on-boarded two new partners. They are — Punit Shah, who was earlier director at InnoVen Capital India, and Ankit Agarwal, an angel investor. 

“Adding two partners of Ankit and Punit’s calibre will enable us to collaborate, identify, and act more effectively against a rapidly growing market opportunity,” said Ajay Hattangdi, co-founder and managing partner of the venture fund.

Alteria Capital is currently investing from its Fund I with a corpus of Rs 962 crore, which has LPs such as Azim Premji Foundation, IndusInd Bank, Small Industries Development Bank of India via fund of funds, and Binny Bansal. 

With its ability to recycle capital, Alteria will have an additional Rs 500 crore to invest in the first fund. Hence, effectively it will have up to Rs 4,000 crore available for funding start-ups from fund I and fund II combined.

“For the second fund, LPs will be predominantly domestic but we are also giving ourselves room to raise money from outside India as well,” said Murali.

Venture debt is an additional layer of capital that sits on top of equity funds, which is a capital for better outcome or insurance for more time, explains Murali. 

As start-ups recognise the benefits of raising alternate capital for their businesses, venture capital has seen a rise in its corpus of deals after the Covid, which is over four times as compared to 2019, say reports.