GREX to launch venture debt for start-up firms

In talks with seven banks and NBFCs to enable loans to start-ups

GREX Alternative Investments Market, a Pune-based start-up that provides exchange-like transaction platform for start-ups and unlisted companies looking to raise funds, is gearing up to facilitate venture debt to start-ups, according to its founder and chief executive officer Manish Kumar.

Venture debt is missing in the ecosystem. Today, start-ups understand only equity, while small and medium enterprises (SMEs) understand only debt. This is just not optimised. GREX is currently in active talks with seven banks and non-banking finance companies (NBFCs) to enable loans to start-ups. This aggregation service would go live sometime during the March time frame, he told Business Standard.

"The idea is to build comprehensive and seamless solutions and integrate all of them in one platform. The central government's announcement on credit guarantee for lending to start-ups will only help us on this (venture debt)," he added.

Launched almost two years ago to facilitate seamless flow of need-based capital access to early-stage start-ups through the private placement route as per the Companies Act 2013, GREX currently has over 450 start-ups and close to 800 private investors on board. Next Gen Paper Solutions Private Limited (Kleeto), an end-to end record and information management company, was the first start-up to raise capital (Rs 1.5 crore) on the GREX platform in October 2015.

"We expect at least 12 start-ups to do their fund-raising rounds fairly quickly on our platform within the next three to four months, with the average investment size hovering around Rs 1.5 crore. The fundraising activity is expected to increase after March as the instrument will change with the addition of the debt component," Kumar said.

GREX had raised Rs 4 crore in its first round of funding from a cluster of private investors in August 2015, to strengthen its technologies and add new financial products and features. "We are in advance talks with Indian as well as overseas investors for raising between Rs 8 crore and Rs 10 crore to strengthen its base," Kumar had earlier told Business Standard.

Kumar said GREX had signed an agreement with credit rating agency CARE to assess and grade start-ups and SMEs registered on its platform and help investors to make an informed decision in terms of the attractiveness of a specific start-up and its potential risk. "The framework has been built and is currently in data testing with various companies. It will be out by the end of this month."