Alteria hits $125m first close on India venture debt fund
India-based venture debt investor Alteria Capital has announced a first close of INR 10bn (USD 125m) on its third fund, noting there is plenty of room for growth in a local VC ecosystem where debt accounts for less than 5% of all investments, compared to 15% in the US.
The firm didn’t disclose the target size for the fund, but it received approval from the Securities & Exchange Board of India (SEBI) earlier this year to raise INR 10bn with a greenshoe option of another INR 10bn.
Alteria claims to be the largest venture debt platform in India with USD 475m in assets under management. The firm raised INR 9.6bn for its debut fund in 2019 and followed up with a INR 18bn sophomore vehicle, which closed in October 2021. LPs include domestic corporates, family offices, and high net worth individuals, as well as VC investors and start-up founders.
While venture debt lacks penetration in India compared to more mature markets, the few specialists active in the market have been increasing their fund sizes. For example, Stride Ventures closed its second fund with INR 10bn in commitments in August. Last year, Trifecta Capital raised USD 140m for its second vehicle. They were at INR 3.5bn and USD 68.4m, respectively, in the previous vintage.
Alteria was founded in 2017 by Vinod Murali and Ajay Hattangdi, who began experimenting with venture debt in a non-fund structure as early as 2008 under the name SVB India Finance. Temasek Holdings acquired SVB India in 2015, changing the name to Innoven, and then sold a 50% stake to United Overseas Bank (UOB).
Alteria’s strategy is unchanged: it will provide a variety of structured credit solutions to venture-backed start-ups looking for capital to support growth. Cheque sizes will be up to INR 1.5bn.
“This is our third fund in five years, which signals the strong momentum in venture debt, as a growing asset class in India. Consistent, stable returns over the years with strong credit risk performance and upside potential from equity kickers proved to be a healthy combination for investors," Vinod Murali, a co-founder and managing partner, said in a statement.
The firm has made more than 100 investments since inception. Its portfolio includes B2B services platform Infra.Market, used car trading players Cars24 and Spinny, payments specialists BharatPe and Zest, social e-commerce operator DealShare, brand agglomeration platform Mensa Brands, and direct-to-consumer brands like MyGlamm, Rebel Foods, and Country Delight.
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