Silicon Valley Bank India announces four deals they made this quarter
SVB India Finance provides specialty debt products to early and growth-stage, VC-backed companies in India. SVB India kick started operations towards the end of 2008 with their first client- Prizm Payments which recently got acquired by Hitachi. Since then, SVB India has funded more than 60 transactions across industry segments and has rotated the initial capital more than twice in the process. The company announces deals every quarter and has come out with the four deals they've participated in this quarter:1) Bluestone: Bangalore based consumer internet startup that does everything from manufacturing to e-tailing of jewellery. The company most recently raised $10 million from Kalaari Capital in March 2014.
2) Freecharge: It is an online platform for recharge, utility payments, promotions and couponing. This month itself, the company raised a $33 million series B from Sequoia Capital an others.
3) EDUsys: EDUsys is a leading education training provider in the global market. It raised a $7.5 million series A back in 2012.
4) Vinculum: It is a software company providing multi channel fulfilment software products and niche domain services for eCommerce and brick n mortar retailers. In March, it raised a series B round from IvyCap Ventures with participation of existing investor Accel India Ventures.
We got in touch with SVB to learn more about the deals:
A look at Venture Debt: Interview with Vinod Murli, MD of Silicon Valley Bank, India
YS: When did these four deals happen?
SVB: These were done in the last 2 months. We typically announce deals every quarter.
YS: Let's take Freecharge for example, how does the deal work?
SVB: On Freecharge - We had an existing relationship with the company as we had provided a venture loan in 2013 along with the earlier Sequoia round. Recently, the company raised ~$30 MM of equity to fuel an aggressive growth plan and the debt was an instrument to provide further liquidity buffer. This is especially relevant in an environment where there is a significant need for investment into marketing, customer acquisition and brand/segment building strategies. Given the high level of competitive spending across Internet companies, the cash cushion helps to provide for more robust and long term planning rather than doing quick bursts and going back to the market to raise more equity. At any stage, debt helps in reducing the overall cost of capital.
YS: What value add does SVB bring in apart from the money?
SVB: Debt allows for companies to start building discipline across various functions as there is a stronger need for data reporting as well as financial control. It helps companies create a track record of having taken a loan and successfully demonstrate repayment capacity over time which will be a useful precedent when companies mature and reach out to more conventional sources of debt funding. We also make connections across portfolio companies wherever relevant and also use the team’s network if required. It is important to note that there is no strategic participation with the company’s decisioning as one would expect from equity investors. At the end of the day, we are hoping to provide an alternative stream of capital to sunrise sectors which otherwise depend solely on equity capital.
YS: What returns does SVB look for/expect when it makes a deal?
SVB: Our returns are typically higher than conventional debt to mature companies given the enhanced risk profile of our target segment.
Website: SVB India
