Rahul Khanna, managing director of India- and US-based VC firm Canaan Partners, has launched a Rs 300 crore (around $50 million) debt fund, which will seek to back early-stage and established technology ventures in India.
Khanna is quitting Canaan and will be involved with the new venture full time from early next year.
Christened Trifecta Capital Partners, the fund will back companies operating in the technology, IT and consumer businesses, Khanna told VCCircle.
"We are proposing to raise Rs 300 crore for the fund and hope to make 50-60 investments with it. We cannot talk about how many people we got commitment from, until we get SEBI approval, which is expected in the next quarter of the current financial year,” said Khanna.
The fund is being floated in partnership with Nilesh Kothari, former M&A head of Accenture India, according to The Economic Times, which first reported the development.
According to Khanna, debt financing is a great business to be in, and Trifecta sees a tremendous opportunity in India. While a fair amount of equity capital is available here, there is no venture debt in the domestic market. The key benefit for investee companies is that they do not have to dilute equity stake, unlike traditional VC funds, he explained.
The debt fund will typically invest between Rs 5 crore and Rs 15 crore each, for 16-18 per cent interest rate. “We will also look at early-stage companies which are in the market to raise their Series A round of funding,” Khanna said.
Trifecta would join the likes of Silicon Valley Bank, which is already present with venture debt offering.
Canaan, which has a three-member team in India, invests in the country out of its global funds. In the last eight years, the fund has invested about $150 million from across three funds in over a dozen startups. The fund has allocated about $50-60 million from each fund for India investments, and is evaluating its India investment strategy.
Earlier, Alok Mittal, managing director of Canaan, announced that he will disassociate himself from fresh investment activity of the Silicon Valley VC firm in the country, while he will continue to manage the firm’s existing investments in India. He had also announced that he is turning an entrepreneur again.
(Edited by Joby Puthuparampil Johnson)