Venture capital firm IvyCap Ventures Advisors Pvt. Ltd plans to launch a venture debt fund with a target corpus of Rs 500 crore ($76.4 million), a top executive said.
The new fund will typically invest at the Series B and Series C stages onwards and will have a ticket size of Rs 20-25 crore, IvyCap founder and managing partner Vikram Gupta said. The fund is likely to be launched in January 2018, he said.
The venture debt fund will be raised from domestic investors, Gupta said. Most existing investors in its venture capital funds will also invest in the new fund, he added.
The debt fund will be sector-agnostic and will have a separate team to avoid conflict of interest with investments from the firm’s venture capital funds.
The Mint newspaper first reported the development.
Venture debt is an important tool of funding for companies as it rarely involves stake dilution by the promoters.
It also provides the companies more time to grow. The segment is growing in India even as venture capital activity is seeing a slowdown.
Temasek-backed InnoVen Capital, Delhi’s Trifecta Capital Advisors, Bengaluru-based Capital Float, IFMR Capital of Chennai and Ahmedabad-based Lendingkart are the leading players offering debt funding to early-stage companies in India.
Earlier this month, InnoVen appointed Ashish Sharma, former chief executive and president of GE Capital India, as the new chief executive officer of its Indian operations.
The VC firm had raised Rs 240 crore for its first fund, IvyCap Ventures Trust Fund I, in 2013. It invested in 10 firms from the first fund. These included RML AgTech Pvt. Ltd (formerly known as Reuters Market Light), Aujas Networks Pvt. Ltd and online retailers eShakti.com and Purplle.com.
In March, Gupta had told VCCircle that it aimed to start returning capital to investors in its debut fund this year and that it was in the last leg of fundraise for its second vehicle. The second fund has a target corpus of Rs 600 crore with a greenshoe option of an equal amount.
The VC firm's investments from the second fund include GrabOnRent Internet Pvt. Ltd, which runs product rental marketplace GrabOnRent; and FTCash, a mobile payments platform for micro merchants in India.
Gupta said that the final close of the second fund will be announced shortly. He also said that the firm will launch its third VC fund after deploying 50% of the second fund.
*This article has been updated to add comments from IvyCap's founder.