Indian Startups Raised $1.2 Bn Venture Debt In 2023, Report Discloses

According to a recent report by Stride Ventures, venture debt investments into Indian startups experienced a remarkable 50 per cent surge in 2023, reaching a significant milestone of USD 1.2 billion. The report anticipates sustained demand for this financing route in the current year.

Titled 'India Venture Debt Report 2024', the comprehensive analysis by Stride Ventures reveals that approximately 175-190 deals transpired in 2023, showcasing a compounded annual growth rate (CAGR) of about 34 per cent from 2017 to 2023.

Ishpreet Singh Gandhi, Founder and Managing Partner of Stride Ventures, remarked, "Venture Debt in India surpassing $1.2 billion in 2023 marks a milestone in the nation’s startup journey, signifying a matured ecosystem and entrepreneurial dynamism. With the market poised to reach USD 1.8-2 billion by 2026, India's presence in the global startup scene appears not just promising but unstoppable."

The report highlights that the consumer segment witnessed the highest number of venture debt transactions, while the fintech sector attracted the highest investments in terms of value. The average ticket size of these deals hovered around USD 4 million, with the Delhi-NCR region securing the highest number of venture debt deals.

Moreover, there's been an observed inclination towards one-stop debt solutions offering comprehensive financial packages, indicating a shift in financing preferences.

Traditionally associated with late-stage funding rounds, venture debt has progressively gained traction across pre-Series A to Series C stages, accounting for 79 per cent of deals and 53 per cent of investment volume, as per the report.

This evolution signifies broader acceptance across various stages of company growth, showcasing an adaptive stride in the utilization of venture debt.

Looking ahead, the report forecasts the cleantech sector to witness significant traction in venture debt investments in 2024. This trend reflects a broader movement towards sustainable and environmentally conscious investments, aligning with global priorities and investor interests in green technologies.

Apoorva Sharma, Managing Partner at Stride Ventures, emphasised, "As both founders and VCs increasingly integrate venture debt to balance equity and growth, it becomes central to India’s funding landscape, signifying a pivotal evolution in the startup ecosystem."