Venture Debt: The Rising Tide of Credit in the New Economy

Yashraj Erande Neetu Chitkara Anshuman Upadhyaya Anwesha Chakraborty Rahul Khanna Abhishek Gupta Arijit Sarkar Sahil Aggarwal Atul Satpathy

Indian Venture Debt investment has grown rapidly at 22% CAGR in the last 3 years to clock nearly $1Bn as of CY22. This is projected to grow 8X to reach $6-7Bn by CY30. Venture Debt is an attractive proposition for founders as it allows them to raise capital with minimal equity dilution. With increasing access, founders are now leveraging Venture Debt for strategic use cases such as M&A financing, growth financing. Despite the funding slowdown, different investor groups are gradually increasing their portfolio allocation towards Venture Debt given its advantages such as predictable cashflows and risk adjusted returns. Recognizing this opportunity, banks have also forayed into providing banking solutions and services customized to the needs of startups.

With this context, BCG partnered with Trifecta Capital to assess the current state of the Venture Debt industry in India and the enablers that will unlock its growth potential. This report delves into the Indian Venture Debt journey so far, compares its performance with that in the US, prevalent use cases in India and insights from the interactions with 40+ founders and 10+ investors on this asset class. With increased awareness, innovative & customized product offerings, broadened pool of investors, the Indian Venture Debt industry is poised for exponential growth in the coming years.