InnoVen co-founders launch India venture debt fund

The new firm, Alteria Capital, is in the process of registering as an alternative investment fund (AIF) with the Securities and Exchange Board of India, Hattangdi told AVCJ, and plans to launch its fund soon. It is targeting a first close early next year.

While Alteria will pursue the same venture lending strategy that Hattangdi and Murali originated at InnoVen, the AIF structure sets it apart from the earlier firm, which is a non-banking finance company (NBFC). The structure will allow Alteria to take equity stakes in its portfolio companies in addition to providing debt capital, giving it more flexibility and allowing higher returns.

Hattangdi and Murali decided to launch their own firm following regulatory changes last year aimed at easing compliance burdens for investors in AIFs. The founders believed the new rules would make India more attractive for overseas investors looking for better returns than they could find in their home markets.

“We have started seeing a lot of inbound interest, particularly from foreign investors that have seen venture debt work as a model in the US, Europe, and other markets for 25-30 years, and have also begun to see interest rates drop in those markets,” Hattangdi said. “They see that interest rates are still fairly high in India and venture debt is a reasonably underserved market at this point, combined with the fact that there's a team out here that's already had nine years' experience doing this, which is Vinod and myself.”

InnoVen was founded by Hattangdi and Murali in 2008 as SVB India Finance, the India arm of US-based Silicon Valley Bank (SVB). SVB India was the country’s first dedicated venture debt platform and in its early years backed start-ups such as Snapdeal and Freecharge. SVB sold the business to Singapore’s Temasek Holdings in 2015 for INR3 billion ($48 million), after which the name was changed to InnoVen. United Overseas Bank bought a 50% stake in the firm the same year.

In the last few years, InnoVen has sought to grow its exposure to markets beyond India and become a pan-Asian source of credit. Investments in this vein include a $6 million commitment last year to Indian software provider Capillary Technologies and educational technology start-up Simplilearn, both of which were seeking to expand into Southeast Asia. 

Alteria will focus exclusively on India, where Hattangdi and Murali believe the start-up ecosystem is in a phase of consolidation but poised to accelerate again soon. They expect opportunities to grow not only in the technology sector, where most of InnoVen’s investments have occurred so far, but also in other consumer-driven industries.

At the time of their departure in June Hattangdi and Murali served as InnoVen's group CEO and COO, and deputy CEO, respectively. Earlier this week InnoVen appointed Chin Chao, CEO of InnoVen Singapore and Southeast Asia, as interim group CEO while it seeks permanent replacements for the two.

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• Topics
• South Asia
• Venture
• Fundraising
• GPs
• Financing
• India
• Innoven Capital
• Appointments
• Structured finance