Canaan's Khanna to launch India venture debt fund
Canaan Partners Managing Director Rahul Khanna is to launch a INR3 billion ($49 million) debt fund aimed at supporting early-stage and established technology ventures in India.
According to The Economic Times, Khanna is leaving Canaan and will be involved with the new venture full-time from early next year. He will be joined by Nilesh Kothari, former M&A head of Accenture India, who will be a partner in the fund.
The new firm managing the vehicle will be called Trifecta Capital Partners and will focus on the technology, IT and consumer sectors. Khanna expects the vehicle to make around 50-60 investments, investing around INR50-150 million each time, at a 16% annually compounded rate.
"We plan to lend about INR1 billion each year," said Khanna. "Demand for venture debt in India is about INR100 billion, out of the INR600 billion venture capital investments in India annually. However there is no avenue where domestic investors could play in this game,"
The GP is in the process of applying to the Securities and Exchange Board of India (SEBI) for official approvals to start the fund within three months. Trifecta will charge a 2% management fee of on the amount disbursed in addition to profit-sharing upon exit. Loan installments will start within a few months of disbursal for venture debt.
Trifecta will join the likes of Silicon Valley Bank India (SVBI) - the Indian operations of the US-based investor - in the venture debt business. SVBI has so far financed almost 70 start-ups such as Myntra, Snapdeal, Carwale, Zoomin, Manthan Systems and Sankhya Labs.
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