Venture debt rises 50% in India to touch $1.2B in 2023: Report

Venture debt investments into Indian startups saw a 50% increase in 2023 to touch $1.2 billion, according to a report by Stride Ventures. It also expects the demand for this route of financing to remain strong even this year.

In its report titled “India Venture Debt Report 2024,” leading venture debt firm Stride Ventures said 2023 saw approximately 175-190 deals and this reflected a compounded annual growth rate (CAGR) of about 34% from 2017-2023.

On the report, Ishpreet Singh Gandhi, Founder and Managing Partner, Stride Ventures said, “Venture Debt in India, surpassing $1.2 billion in 2023, marks a milestone in the nation's startup journey as evidence of a matured ecosystem and entrepreneurial dynamism. With the market poised to hit $1.8-2 billion by 2026, India's future in the global startup scene looks not just promising but unstoppable.”

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According to the report, the consumer segment saw the highest number of venture debt transactions while in terms of value, the fintech sector received the highest investments. The average ticket size of the venture debt deals was around $4 million. The Delhi-NCR region received the maximum number of venture debt deals.

The report noted that there is an increased preference for one-stop debt solutions that offer comprehensive financial packages.

The report said venture debt was traditionally seen in the late-stage funding rounds of startups. However, there has been a gradual shift, with pre-Series A to Series C stages now receiving 79% of deals and 53% of investment volume.

Stride Ventures said this pivot towards early to mid-stage companies indicates an evolutionary stride in the use of venture debt, showcasing a broader acceptance across various stages of company growth.

In terms of future projections, the report said the cleantech sector is expected to gain the maximum traction in terms of venture debt in 2024. This shift underscores a broader trend towards sustainable and environmentally conscious investments, aligning with global priorities and investor interests in green technologies, it noted.

Apoorva Sharma, Managing Partner, Stride Ventures said, “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.”