Alteria Capital becomes Asia’s fastest venture debt firm to cross $750 million of startup debt funding

Punit Shah, Vinod Murali, Ankit Agarwal (L to R)

Alteria Capital, India’s largest venture debt fund, has reached a significant milestone by becoming the fastest firm in Asia to surpass $750 million funded to Indian startups. With over ₹6,000 crore deployed across 200 startups, the firm has been a key player in India’s startup ecosystem. Alteria manages over $550 MM AUM and counts market leaders like Rebel Foods, Zepto, Ola Electric, Country Delight, Spinny in its portfolio. In a conversation with Moneycontrol, Managing Partners Vinod Murali, Ankit Agarwal and Punit Shah, discuss the venture debt landscape, current funding challenges, and their future strategy.

Edited excerpts:

Q. How has the funding winter reshaped the Indian startup landscape, particularly in terms of profitability and investor sentiment?

Punit: The funding winter has compelled startups to focus on profitability and unit economics. While this tightening isn’t new, it’s reshaping the ecosystem again. Positive performances by listed tech companies like Zomato are signaling a potential revival of investor confidence, particularly for late-stage startups.

Vinod: We’ve seen similar market conditions in 2012-13 and 2016-17, but this time, there’s an unprecedented amount of dry powder focused on India, driven by long-term investors. Strengthened political and economic ties with key regions, like the Middle East and the U.S., are boosting investment.

Q. With increased dry powder and global interest in India, what makes this market cycle different from previous ones?

Vinod: Unlike past cycles, there’s now a considerable amount of long-term capital available for Indian startups. Additionally, stronger political and economic relations with global regions have bolstered confidence in the Indian market. Domestic capital, no longer heavily dependent on foreign investors, has also made Indian public markets more resilient.

Ankit: Family offices are playing a more active role, bringing deep business insights. Monumental exits like Flipkart and Nykaa have attracted more investors, with retail and institutional investors increasingly participating in tech IPOs.

Q. Venture debt is growing in popularity. How do you see the segment evolving, and what’s Alteria’s strategy for staying ahead?

Vinod: Alteria focuses on three core pillars: India, Startups, and Credit. We aim to become a one-stop solution for startups, offering tailored debt structures at scale. Our next phase is innovating flexible debt solutions for large startups that aren’t ready for conventional capital, requiring creative fund architecture.

Ankit: Instead of diversifying into new asset classes, we see potential for innovation within the venture debt space. There’s significant demand to meet credit needs across various stages and sectors of startups. While equity gets the spotlight, debt has a vast untapped potential.

Punit: We take a data-driven approach, focusing on consistency and long-term strategy, much like Rahul Dravid’s playing style—deliberate, rather than fast-paced like Sehwag.

Q. Why did Alteria introduce the Shorter Duration Scheme (SDS), and how does it address specific market needs?

Ankit: We noticed a market gap for young companies with balance sheet efficiency needs, like inventory or receivables financing. The Shorter Duration Scheme (SDS) caters to such startups with debt tenors of under 18 months, addressing working capital needs or helping NBFCs build their loan books. Companies like Spinny, Giva, and Infra.market have benefitted from this.

Vinod: SDS also provides an entry point for investors who prefer shorter tenors and lower risk, akin to fixed deposits or liquid funds. Globally, access to better-quality data has driven investor confidence in markets like the U.S. and China, and we believe this will be crucial for India as well.

Q. How is India’s LP landscape shifting, particularly with the rise of domestic and family office investments?

Ankit: Over the last decade, domestic capital has increasingly entered the startup ecosystem, with family offices and institutional investors becoming more active. Domestic capital now represents 10-15% of flows into Indian alternative assets, with investors from Tier 2 and Tier 3 cities also getting involved.

Punit: Government initiatives like Atmanirbhar Bharat are fueling this trend. Domestic liquidity from founders and senior leadership, spurred by listings and secondaries, is being reinvested into the ecosystem, driving a founder-to-funder cycle similar to what we’ve seen in the U.S.

Q. What role will Alteria play in developing new venture debt products like Growth Debt, and how does it fit into India’s evolving startup ecosystem?

Vinod: Our next focus is Growth Debt for late-stage startups. Like leveraged finance in the U.S., as startups scale, capital providers need to evolve alongside them. By maintaining the trust of investors and founders, we aim to be the go-to brand for venture debt, Shorter Duration Schemes, and Growth Debt, as India continues to offer immense growth opportunities.