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Exclusive: Trifecta Capital loses partner, eyes shift in strategy

Company plans to slowly widen its scope beyond venture debt and is looking at selective equity investments

Mumbai / March 10, 2021 / 02:24 PM IST

Trifecta Capital, which provides loans to some of India’s biggest startups, has seen a partner leave the firm, even as it is broadening its strategy to go beyond venture debt, sources told Moneycontrol.

Aakash Goel, who has been a partner with Trifecta for three years, communicated his decision to leave to Rahul Khanna and Nilesh Kothari, co-founders of the firm, a few months ago, these people said.

Goel has not decided on his next move, but could start up on his own. Prior to Trifecta, he was a principal with Bessemer Venture Partners, with his investments including online grocer BigBasket, online pharmacy PharmEasy and home services firm UrbanCompany. Trifecta has also provided debt to all three, and others, including car-selling portal Cars24, content startup ShareChat, home furnishing firm Livspace, and news aggregator Dailyhunt.

Goel’s departure comes at a busy time for Trifecta, which closed its second venture debt fund at Rs 1,025 crore last week. It already plans to hit the market for a Rs 1,200-1,500 crore fund by the end of the year. Last October, Trifecta also hired Lavanya Ashok, a Goldman Sachs managing director, as partner, to widen its scope and start pursuing equity transactions selectively, sources said.

Trifecta confirmed Goel’s exit but declined to comment further. In response to Moneycontrol’s queries, Khanna, who is managing partner at Trifecta, said equity investments are not on the horizon right now but that “we have hired Lavanya to explore newer strategies; I can’t comment on that right now. Our strategy from Fund 3 will be similar to Fund 2, but we will look for more innovative debt financing, maybe structured products,” he said.

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Ashok’s appointment went below the radar, but the Goldman veteran’s (she spent a decade there) move is an interesting one. Her mandate is to selectively invest in late-stage startups, from the Trifecta portfolio as well as outside. For a venture debt firm to do venture capital (equity) cheques is a first in India, although, along with debt, these firms take a small equity kicker in the form of warrants, similar to collateral.

Curiously, Ashok’s only real technology/internet investment is furniture retailer Pepperfry. Her other investments include offline businesses such as Azure Hospitality, Global Beverages and Foods and Nova Medical. On the Trifecta website, her designation is Partner, Equities.

And while the equity strategy could take some time to fructify, it indicates the growing ambition of venture debt firms in India. Alteria Capital, another venture debt firm, is looking to go beyond its core solution as well. From its Rs 1,750 crore second fund, Alteria plans to diversify its approach and go beyond traditional venture debt. For startups it has backed, which have grown into mature companies with sustainable cash flows, Alteria will also provide more traditional lending options from this fund. Rather than the usual equity warrants, companies can provide assets or other traditional modes as security, also bringing Alteria’s offering close to regular banks and non-bank lenders (NBFCs), Moneycontrol reported on December 7 last year.

Trifecta, started by Khanna and Kothari in 2015, raised a Rs 500 crore first fund, which it followed up with the Rs 1,025 crore second fund. Unlike their VC counterparts, debt firms can also recycle the capital twice — the repayments they get can be reinvested in new companies — thus having more utility for the same money.

Venture debt’s usage in India has zoomed over the last few years, as startups look to supplement equity with debt for their working capital needs. Using debt to fund everyday operations is more financially lucrative, and some of the venture capital these startups raise is used to pay back the debt.

Trifecta, Alteria and Temasek-owned InnoVen Capital are India’s three largest venture debt players, while Blacksoil and Stride Ventures are also raising funds for this space exclusively.
M. Sriram
first published: Mar 10, 2021 02:24 pm

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