Alteria Capital announces final close of its second venture debt fund at Rs 1,800 Cr

Alteria Capital received approvals from SEBI in December 2020 for its second venture debt fund with a target corpus of Rs 1,000 crore. The fund stated there has been strong interest from domestic investors to participate in this asset class causing a significant oversubscription.

"The fund had demand for 2X of the base target and has closed at Rs 1,800 crore. The investor mix includes domestic institutions, large family offices as well as senior corporate professionals and VCs/founders from the startup ecosystem," the fund stated.

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Alteria will continue to target startups across early and growth stages, with cheque sizes up to Rs 200 crore. There will also be an allocation for structured debt products aimed at late-stage companies which have a differentiated risk profile.

“We are delighted to continue to have the confidence of our investors but also acutely aware of the responsibility that it brings,” said Ajay Hattangdi, Co-founder and Managing Partner of Alteria Capital, adding, “Our model, which focuses on extending patient capital with product flexibility and optimal risk-adjusted returns, has resonated well with investors and also gained us a wonderful set of entrepreneurs and portfolio companies.”

The fund promoted by veterans Ajay and Vinod Murali will use the capital to back startups that have already raised VC funding and provide them with a range of speciality debt solutions. The team stated the success of the Alteria Activate Platform has also been an added boost for startups where corporates have found an efficient mechanism to engage with young companies, resulting in revenues and investments for startups. 

Alteria Capital Fund II will be the largest pool of alternative debt capital available for early- and growth-stage startups in India. With its ability to recycle capital, Alteria will effectively have over Rs 5,000 crore available for funding startups across venture debt and structured solutions. 

Vinod Murali, Co-founder and Managing Partner, Alteria Capital said, “We are grateful to all our founders as well as investors who have reposed their faith in us. This fund has been raised completely on Zoom, from domestic investors, reflecting the massive growth in appetite in India for investment into alternative assets. There is a lot more credible data on performance and the stable, consistent performance coming out of the venture debt asset class is being appreciated by the Indian investor base."

Alteria has concluded more than Rs 1,000 crore worth of deals in the first nine months of 2021. The second fund has already drawn down 35 percent of capital, and funded more than 20 companies. Alteria expects to deploy more than $175 million in 2021 across both funds, which is a reflection of the rapid growth of the Indian entrepreneurial ecosystem.

“Alternative investments as an asset class has become a real and meaningful allocation for all sets of investors, given the nature of predictable returns with a potential upside available with venture debt. With an evolving and maturing ecosystem, debt as a means of capital has evolved within the founder community with strong data points to reflect savings on dilution and better RoE all for stakeholders,” said Punit Shah, Partner, Alteria Capital.

Some of its larger portfolio companies are Rebel Foods, Bharat Pe, Infra Market, Spinny, Cars24, Mensa Brands, Dealshare, Zest Money, Dunzo, Toppr (acquired by BYJU'S), and Stanza Living.

“Apart from existing LPs, we were enthused to see active participation from first-time investors who have never invested in the startup ecosystem in any form before, especially founders who have experienced and understand the importance of debt capital to high-growth startups,” said Ankit Agarwal, Partner, Alteria Capital.

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