Indian start-ups raised $1.23 bn venture debt in 2024: Stride Ventures

India’s venture debt market soared to $1.23 billion in 2024, growing at a compound annual growth rate (CAGR) of 58 per cent since 2018, as rising confidence in the country’s startup ecosystem catapulted the number of deals to a record 238 last year, up from 56 in 2018. 

The global venture debt market has been growing at a CAGR of 14 per cent. 

Venture debt is a private credit extended by lenders to startups that show strong growth potential. 

However, on a year-on-year (Y-o-Y) basis, the growth in this category was almost flat, according to a report from Stride Ventures in collaboration with Kearney. In 2023, venture debt in India stood at $1.2 billion, representing a growth of 2.5 per cent Y-o-Y. 

The flat growth in the venture debt category has come at the cost of growth in the venture capital segment.  

India’s venture capital market rebounded with a 20 per cent Y-o-Y increase in 2024, reaching $12 billion. 

The fourth edition of the report titled ‘Global Venture Debt Report’ pointed out that the venture debt market is now perceived as neutral to mature, with 39 per cent of stakeholders predicting continued significant growth. This is also evident from the exit trends. 

India’s venture exits surged 1.7 times to $6.6 billion in 2023, with 55 per cent of exits driven by public market sales. Venture debt-backed startups raised an average equity funding of $81.2 million in 2024. 

Ishpreet Singh Gandhi, founder and managing partner of Stride Ventures, said, “India’s venture debt market has grown from being nominal six years ago to $1.23 billion in 2024. Venture debt across the world is growing at a 14 per cent CAGR, advancing from being a niche instrument to a mainstream asset class, empowering entrepreneurs to grow sustainably. We aim to offer a strategic lens on its evolving role and adoption across both emerging and developed ecosystems.” 

The report said that the sectors with a strong growth potential for venture debt are consumer (77 per cent), fintech (46 per cent), and cleantech (33 per cent). 

In terms of deal value, fintech emerged as a frontrunner in 2024 with a total of $447 million amount comprising 49 deals. On the other hand, the consumer sector witnessed the maximum number of venture debt transactions at 81, comprising a deal value of $295 million. For the cleantech sector, the deal value stood at $202 million (22 deals). 

 

According to the report, some of the top use cases for venture debt include working capital (52 per cent), growth financing (44 per cent), and runway extension (43 per cent).

 

The venture debt market is gaining a foothold across metropolitan cities. Bengaluru received the highest number of venture debt funding at $485.5 million with 80 deals. It was followed by Mumbai at $244.6 million (42 deals) and Delhi NCR at $242.5 million (69 deals).

 

Globally, the value of venture debt deals rose from $37.9 billion in 2018 to $83.4 billion in 2024.

 

In markets such as the United States and Europe, venture debt currently accounts for 20-30 per cent of the total venture capital funding, the report noted.