Venture debt platform Alteria Capital has announced the International Finance Corporation (IFC) as an anchor investor in its Shorter Duration Scheme (SDS), marking IFC's first investment in the small and medium enterprise (SME) credit segment globally.
Launched in March last year as part of its Fund III, SDS focuses on meeting short-term capital requirements of startups (with debt tenors of less than 18 months) in sectors like fintech, consumer, and electric vehicles (EV), among others.
While the firm is yet to mark the final close of SDS, it has already invested in companies such as Ivy Homes, Swara Fincare, Moneyview and TEN x YOU through the fund. Alteria plans to make as many as 50 investments over the next 2.5 years via SDS.
"We are having ongoing conversations with some foreign and domestic investors which is expected to take a few more months to close. We will raise some more capital, and are flexible on the sizing of the fund," Vinod Murali, Managing Partner, Alteria Capital, told Moneycontrol.
While Murali did not disclose the target corpus for SDS, the firm was looking to cumulatively raise $250-$300 million via its third fund. Of this, the Venture Debt Scheme was closed at roughly $186 million, with the remaining coming from SDS.
"In SDS, we have a commitment period of two and a half years, and we expect to fully return capital in about 12 months after that. It is a shorter duration product where we return capital, with robust fixed income returns, in under four years. In a venture debt product, this would take five to seven years but the returns have a higher component of equity upside," Murali explained.
As much as 60 percent of the fund will be focused on licensed non-banking financial companies (NBFCs), while the remaining 40 percent will go towards consumer businesses.
"For six decades, IFC has been at the forefront of impact investing in emerging markets. Innovative financial solutions are crucial for bridging funding gaps," said Wendy Werner, Country Head for India and Maldives, IFC.
“By addressing short-term financing needs and signalling market confidence, we aim to help support India’s start-up and disruptive technology ecosystem and accelerate economic growth," she added.
To date, Alteria has invested more than $800 million in aggregate debt funding to Indian start-ups. In fact, it recently became the fastest firm in Asia to surpass $750 million in debt funding deployed.
The venture debt platform’s portfolio includes prominent Indian start-ups like Spinny, Ola Electric, One Card, Rebel Foods, Ather, Bluestone, Jupiter, Fibe (Early Salary), Giva and Sarvagram.
Alteria’s onboarding of IFC as an anchor investor also comes at a time when India-focused venture capital firms have kickstarted their fundraising efforts again after a year-long pause.
After VC fundraising in 2024 hit a five-year low, several global as well as domestic investment firms, including Accel, Bessemer, among others, have announced large funds this year, spurred on by India’s strong startup IPO pipeline and a recovering funding landscape.
With an increasing number of mature startups emerging at series A and series B stages, VC fund sizes have also started to increase, along with the cheque sizes cut by these investors, Moneycontrol reported earlier.
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