Venture debt players look to diversify with eye on growth

Gulf, Southeast Asia and Europe are the key targets amid limited opportunities in India

- Priyamvada C & Mansi Verma

Debt funds EvolutionX Debt Capital, Stride Ventures and BlackSoil Group, that primarily lend to fastgrowing, new age economy companies in India, have expanded to markets in West Asia, Southeast Asia, and Europe in recent months to diversify exposure and maximise returns.

With limited opportunities in Indian markets and ongoing geopolitical uncertainties, this is likely to be the next leg of growth for these players, according to industry executives and consultants.

Venture debt comprises high-interest loans to early stage companies that want to raise capital without diluting equity. Typically, startups and early stage companies turn to such debt when venture capital becomes scarce or expensive. Venture debt is usually given after assessing the company's ability or likelihood to raise the next round of equity financing alongside other factors such as cash flows and overall financial health.

To be sure, venture capital remains the main source of finance for startups in India even as venture debt has gained a market as startups started looking for alternative funding sources with a decline in venture funding activity. As a result, onestop debt solutions that simplify fundraising are being preferred.