Alteria Capital closes Rs 1,800 crore second venture debt fund

(From left) Vinod Murali, Ankit Agarwal, Ajay Hattangdi and Punit Shah, partners at Alteria Capital.

Alteria Capital, which lends to startups, said on September 30 that it has closed its second venture debt fund at Rs 1,800 crore- the largest domestic corpus by a new age fund manager amid an unabated startup funding boom.

Along with interest, Alteria also gets a small portion of shares in the companies it lends to, which include social commerce firm Dealshare, cloud kitchen Rebel Foods and online car retailer Spinny among others.

Alteria raised the entire fund from domestic investors and via video calls, both unheard of for a large fund until recently. The equity funding boom means that entrepreneurs have often raised more venture debt as well, although in some cases the boom has meant that founders raise only equity, simply because so much of it is available.

“It is hard to tell when this frenzy will get tempered. Founders are realising that it is a great time to raise capital and optimising for that, which is understandable,” Vinod Murali, co-founder and managing partner, Alteria told Moneycontrol.

“But that also means decision making can be a bit harder and we have to be more careful than ever. However the more mature founders are making sure they will be well capitalised next year, even if momentum shifts,” he added.

Founded by Murali and Ajay Hattangdi in 2018, Alteria raised a debut Rs 960 crore fund in 2019. In April this year, it marked a Rs 1,350 crore first close of the second fund. From the second fund, it is also diversifying beyond venture to more structured deals- similar to a bank or NBFC.

Alteria expects to invest over $200 million in 2021, with individual investments as high as $20-25 million. In many cases it also doubles on portfolio companies and lends further to them.

While it did not disclose names of investors in the fund (limited partners or LPs), some of its earlier backers include IndusInd Bank, Small Industries Development Bank of India (Sidbi), Azim Premji Foundation and Flipkart co-founder Binny Bansal.

“Apart from existing LPs, we were enthused to see active participation from first time investors who have never invested in startup ecosystem in any form before, specially Founders who have experienced and understand the importance of debt capital to high growth startups.” said Ankit Agarwal, Partner, Alteria Capital.

Another venture debt firm InnoVen Capital India also announced the first close of its debut fund at Rs 740 crore earlier this week, after it operated for years with money from its parent Temasek, which commonly allocated money to India, China and Singapore. Trifecta Capital is also raising a venture debt fund this year, signaling the asset class’ rapid growth.