India’s Venture debt firm Stride Ventures announced the launch of its second fund that has a targeted corpus of INR 1,000 crore (USD 137 million) with a greenshoe option to raise an additional INR 875 crore (USD 120 million).
Greenshoe option allows companies to raise additional capital over and above its originally targeted corpus. This usually happens if there is interest from investors as well as scope for fund to invest more.
The development comes months after it said it has closed its maiden fund at a little over INR 350 crore (USD 48 million).
The second fund, Stride Ventures said, will have a commitment period of four years, giving it ample time to recycle the deployed capital. It estimates that by reinvesting the deployed fund the company will have over INR 3,000 crore (USD 412 million) to fund startups.
In the first four months of this year, Stride Ventures has disbursed over INR 200 crore (USD 27 million) in nine startups, of which five are yet to be announced, the firm told KrASIA.
“As founders become increasingly aware about debt and alternative capital for non-dilutive structures, our deployments have grown considerably as we partner with fundamentally strong companies,” said Ishpreet Gandhi, founder and managing partner, Stride Ventures.
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The two-year-old fund has provided debt to more than 20 companies till now from its first fund. “With zero delinquencies, the first fund is on track to deliver its target IRR of 18–19%, notwithstanding the economic disruption due to COVID-19,” the company noted in a statement.
Gandhi said, existing investors have shown interest in participating in the second fund. It is also looking at onboarding new investors. “With these considerations in mind, we are looking at the first close of our second fund within the next three months.”
In India, companies often go for venture debt when they are in a growth stage and want to raise money without diluting their stake in the company. Venture debt firms, unlike venture capital funds, charge an interest fee on the investment instead of taking an equity in the company.
According to data from Venture Intelligence, Indian venture debt funds raised a total of USD 85 million in FY 21, up from USD 62 million raised in FY 20. Earlier this year, Trifecta Capital, another venture debt fund, raised USD 140 million for its second fund. Similarly, Unicorn India Ventures, said it has raised USD 12.33 million for its second fund and is in the market to raise another round of capital of about INR 400 crore (USD 55 million) in the next 12 months.