Alteria Capital, a home-grown venture debt player, has raised Rs 960 crore (or $140 million) in its maiden fund to back high-growth start-ups at a time when venture debt is attracting investors looking to grow their capital, and entrepreneurs.
Those who invested in the fund are IndusInd Bank, Small Industries Development Bank of India (through fund of funds), Azim Premji Foundation, and Kiran Reddy, the founder of Chennai-based multiplex chain SPI Cinemas, among others. Flipkart co-founder Binny Bansal has also invested in the fund. Several other family offices and domestic banks have invested, names of which have not been revealed.
Alteria Capital is promoted by Ajay Hattangdi and Vinod Murali, who were earlier leading InnoVen Capital. It announced the fund in 2017 and received the approval from the Securities and Exchange Commission of India in October that year. It targeted a raise of Rs 800 crore, with a green shoe option of Rs 200 crore.
The founders said the entire capital was raised locally, making Alteria Capital the largest such fund supported by only domestic investors. “The fact that we raised this entire fund from domestic capital speaks about the fact that LPs are now beginning the asset class and what it means,” said Hattangdi.
Alteria Capital is part of a growing ecosystem of venture debt providers, which include players such as Trifecta Capital and InnoVen Capital. In May, InnoVen Capital said it raised $200 million from Singapore’s government investment firm Temasek and United Overseas Bank, its primary investors, while Trifecta is raising its second fund of Rs 800 crore.
In the two years since it started out, Alteria Capital has invested Rs 540 crore across 28 transactions. Another Rs 75 crore has been committed across various deals. The founder said they expect to completely deploy the fund in 18 months, and may start work on fund II sometime next year.
Alteria Capital’s portfolio includes Faasos, Lendingkart, ZestMoney, Vogo, Toppr, Raw Pressery, Universal Sportsbiz, Dunzo, Stanza Living, Portea, Fingerlix, mfine, Loadshare, Country Delight, Spinny, LimeTray, and Vinculum.
“Venture debt is now an integral part of funding rounds for start-ups across stages and sectors. There is better awareness of how the product can be utilised by start-ups as well as the expectation on returns for investors into the fund,” said Murali, co-founder and managing partner.
“Since we have the ability to recycle capital, we will end up deploying approximately Rs 1,800 crore from this fund and we are seeing a very strong pipeline of startups across technology, health care, and consumer segments to absorb this capital over the next couple of years,” he said.
Murali and Hattangdi had set up SVB India Finance, a subsidiary of Nasdaq-listed SVB Financial Group, in 2008 and expanded the business into South East Asia. The firm was later taken over by Temasek, Singapore’s sovereign wealth fund, and United Overseas Bank, in 2015 and rechristened InnoVen Capital.