InnoVen’s venture debt investments in India rose 25% on record follow-on funding
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Temasek’s venture debt arm InnoVen Capital has recorded a 25% jump in funding in 2017, thanks to the follow-on investments in high-growth portfolio firms such as Nasdaq-listed Yatra Online Inc. and branded budget hotels marketplace OYO Rooms.

The venture debt firm had disbursed $75 million (about Rs 477 crore) and committed another $10 million last year, the firm said in a statement.

InnoVen Capital had invested Rs 100 crore in Yatra, which runs travel portal, to mark its biggest venture debt deal till date, it said. Other follow-on deals included investments in Swiggy, Capillary Technologies, Rentomojo and Belong.

The company also added 22 new companies to its portfolio, including mid-growth Indian firms Blackbuck, Pepperfry, NestAway, ShopClues and Mswipe, it added.

Notably, InnoVen’s pace of investment picked up in the latter half of the year with the company doubling its average ticket size to Rs 20 crore, against Rs 10 crore in the first half.

“While the venture debt market only saw marginal growth, we have grown 25%-plus and increased our market share,” said Ashish Sharma, CEO, InnoVen Capital India. “We are particularly pleased with the momentum, as our pace of deployment in the last four months of 2017 was double the average of the first eight months.”

The total amount of venture debt extended by InnoVen India since its inception has now exceeded $270 million across 165-plus transactions in 110 companies. Innoven Capital had invested 70% of its capital in business-to-consumer (B2C) companies as compared to 30% in business-to-business (B2B) firms last year. The key sectors were ecommerce, enterprise-tech, logistics, travel and food.

It also opened an office in China during the year to expand its footprint outside India and Southeast Asia. “The growth we have registered, be it in terms of funding amount, number of deals, or geographical expansion, has served to cement our standing as a leading venture debt firm in Asia and our underlining commitment to support innovative ideas and businesses,” said Sharma, who came in as the CEO of Indian operations in October last year.

Sharma was appointed three months after its former CEO Ajay Hattangdi and another key executive Vinod Murali left the firm.

In June 2017, InnoVen Capital was in limelight after Hattangdi and Murali left in quick succession. The duo have since started their own venture Alteria Capital Advisors LLP, which has received the regulatory nod to launch its Rs 1,000 crore ($154 million) venture debt fund. After the exits, the firm had appointed Chin Chao, CEO of its Singapore and Southeast Asia region, as the interim CEO for its Indian division.

Singapore’s state-owned investment firm Temasek and Singapore-based lender UOB had acquired Nasdaq-listed diversified financial services company SVB Financial Group’s specialty finance business focussed on venture debt in early 2015. SVB India Finance was then renamed as InnoVen Capital Group.

The venture debt firm usually writes cheques at the post-Series A stage, but it mentors early-stage startups as well.

Venture debt is an important tool of funding for companies as it rarely involves stake dilution by promoters. It also provides companies more time to grow. The segment is growing in India even as venture capital activity is seeing a slowdown.

Delhi’s Trifecta Capital Advisors, Bengaluru-based Capital Float, IFMR Capital of Chennai and Ahmedabad-based Lendingkart are leading players offering debt funding to early-stage companies in India.

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