Online lending platform Indifi has partnered with TiE Delhi-NCR to help startups meet their working capital requirements through the coronavirus pandemic.
Indifi will provide growth debt capital from Rs 10 lakh to Rs 2 crore based on the financial health of the startup. These would be short-term loans with repayment cycles of 12 to 24 months, depending on the startup's revenue generation capacity.
Speaking exclusively to YourStory, Alok Mittal, Co-founder and CEO, Indifi, said:
"Our intent is to help startups that have a predictable revenue stream to scale through this crisis. They need capital to grow their businesses, acquire customers, and generate cash flows. We want to get behind that. But we are also telling them that this is growth capital, and not survival capital for the downturn."
Indifi looks to lend to "a few hundred" startups over the next few months. "We have no biases for any kind of startup – bootstrapped, early stage or Series A/B/C. We will back companies that can demonstrate their cash conversion cycles," Alok explains.
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The partnership will support startups across sectors like SaaS and enterprise services, direct-to-consumer online brands, edtech, digital media or advertising, shipping, and leasing companies.
Startups that are looking to expand their business or ramp up service offerings by adding more verticals to existing models stand to gain.
Along with this, TiE Delhi-NCR will also provide strategic guidance, active mentoring support, funding opportunities, and a 360-degree growth-oriented programme to its portfolio startups to help them "stay on course" in these trying times.
Rajan Anandan, President, TiE Delhi-NCR, said,
“The association falls in line with our mission of providing financial, mentorship, and networking support to new-age innovators and gain access to a bigger market. We are committed to enriching this partnership by drawing on our vast network to provide mentorship support to the beneficiary companies both at the beginning of the programme and during the course of the agreed plan."
Why debt capital helps now
There's no denying the hard reality that VC funding has been severely hit by the pandemic. Several deals have been deferred and term sheets withdrawn.
The uncertainty around situation has made it even tougher for startups to plan their cash flows and growth. And that is where debt capital comes to the rescue.
Saurabh Srivastava, Chairman Emeritus, TiE Delhi-NCR, tells YourStory,
"Getting equity capital is difficult now, and you won't get it in the right terms. It will hit company valuations and that is avoidable. The biggest challenge for startups is to stay in business. With debt capital, they can continue to scale and focus on the things that work for them.
TiE Delhi-NCR is instituting a panel of coaches to guide startups through the pandemic.
"The programme involves top-tier startup consulting from the likes of Rajan [Anandan], Deep [Kalra, who's a Charter Member and Mentor at TiE Delhi] and other leaders of the ecosystem. Nobody has dealt with a situation like this before, and we are forming a network of coaches to help startups grapple with the uncertainty."
Indifi, which works with multiple lenders and banks, is also in the process of building a "coalition of partners" who can scale this programme.
"The startup community in India is too large for one NBFC to pull through," says Alok.
(Edited by Teja Lele Desai)
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