Stride Ventures marks first close of its third venture debt fund at $100 million

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Stride Ventures has marked the first close of its third fund at $100 million as the homegrown venture debt firm is looking to capitalise on the rising venture debt market in India. This comes at a time when private equity investing has dropped significantly amid macroeconomic headwinds.

Stride Ventures plans to raise another $100 million for the final close of the fund, the company said in a statement on May 9. The company managed to raise the amount in four months after receiving a license for the fund.

The first close is a significant milestone for venture capital and venture debt firms, post which these companies start deploying the capital.

Venture debt is a loan arrangement from a lender to a startup without the dilution of shareholding. It is usually given alongside an equity raise or within a few months of a round closing.

Stride Ventures said that the Indian venture debt market is expected to reach an annual deployment of $3-4 billion by 2025. The firm has backed more than 100 startups across sectors including Sugar Cosmetics, The Good Glamm Group, Mensa Brands, Exotel, Yubi, MoneyView, VideoVerse, Miko, Perfios, HealthifyMe, Ace Turtle and Waycool among others.

"Stride takes immense pride in being the largest contributor of credit to new age businesses that has sanctioned over approximately Rs 5,000 crore in the Indian startup ecosystem," said Ishpreet Gandhi, Founder and Managing Partner of Stride Ventures

"Stride Ventures' success in delivering value to its investors is a testament to our rigorous processes and strong internal governance structures,” Gandhi added.

The firm claimed that it successfully distributed over 100 percent of its commitments, which included coupon payouts and principal redemptions, to the early investors of its Fund 1.

It also added that its third fund received backing from a varied group of institutional investors, including banks, insurance companies, and family offices, without disclosing their names.

Through the fund, it will make investments in fast-growing startups that exhibit robust business models, strong unit economics, and skilled management teams, the company said.

The first close of Stride Ventures' third venture debt fund comes at a time when the demand for venture debt in India is on the rise. Last year, Moneycontrol reported how in the first eight months of 2022, debt firms had deployed $312 million or 11 percent more than the year-ago period, even as the overall investment sentiment had turned weak due to rising interest rates.

"We see a growing demand for venture debt as startups look to optimise their capital structure and preserve equity for future rounds. With the launch of our third fund, we're well-positioned to meet the unique debt requirements and global ambitions of Indian startups," said Apoorva Sharma, Managing Partner at Stride Ventures.

Founded in 2019, the company has raised three funds to date. The venture debt firm closed its second fund in August last year with a corpus of $200 million.