Venture debt funding sees prominence among startups, Bengaluru takes lead: Report

Amidst India’s maturing venture capital (VC) ecosystem, startups are increasingly looking to venture debt as an attractive option to secure growth capital without diluting their stakes in the company, a report by VC firm Stride Ventures in collaboration with Kearney said.

According to the ‘Global Venture Debt Report 2025’ report, venture debt (VD) is gaining prominence across India, the Middle East, Southeast Asia, and Europe.

India has emerged as the key driver of this trend, with the country’s VD market growing at a 58% compound annual growth rate (CAGR), touching $1.23 billion in 2024.

Notably, fintech, consumer tech, and cleantech segments have seen rising interest for venture debt in the country, with Bengaluru seeing 40% of the deal volumes, followed by Delhi-NCR and Mumbai.

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Nearly 61% of founders surveyed for the report noted that venture debt is a preferred tool for runway extension and working capital management. Indian startups also see a rise in time gaps between subsequent funding rounds, especially in the early and growth stages.

Additionally, 40% of the respondents cited venture debt’s growing role in pre-IPO bridge financing. As startups flock to public bourses, many companies look to debt to help scale and stabilise operations. The remaining 37% said that debt was important in managing inventories and capital expenditure financing.

Indian limited partners (LPs) also view the asset class favourably, with 54% of LPs acknowledging VD as a critical component for balanced capital allocation. VCs, too, are increasingly endorsing debt as a complement to equity financing.

The report noted that venture debt is prioritised by Indian founders due to its flexibility, speed, and network introductions.

“As India’s venture debt market grows from being nominal six years ago to $1.23 billion in 2024, this report expands its focus to global markets. Venture debt across the world is growing at a 14% CAGR, advancing from being a niche instrument to a mainstream asset class, empowering entrepreneurs to grow sustainably,” said Ishpreet Singh Gandhi, Founder and Managing Partner, Stride Ventures.