Deal focus: InnoVen targets India-Southeast Asia angle

Innoven Capital has already made a name for itself as India's first venture debt firm, providing financing to prominent start-ups like Snapdeal, Myntra and Firstcry. Now it is watching the country's entrepreneurs look overseas for continued growth, while planning its own role in fueling their ambitions.

"What we're looking to do is stitch together a unified platform, with one office in India and one office in Southeast Asia, and offer clients one platform for raising capital," says InnoVen CEO Ajay Hattangdi. "This way they're free to take capital across India and Asia wherever they go."

The firm's cross-border strategy took a step forward recently, with an investment of $6 million in Capillary Technologies and Simplilearn. The India-based companies are looking to expand in Southeast Asia, with Singapore as a first stop.

Capillary is no stranger to InnoVen; it firm first invested in the customer relationship management software developer in 2014, and has provided several loans since. Simplilearn, a provider of online and in-person training courses for professional certifications to clients worldwide, is receiving its first investment from InnoVen.

Introductions to the two firms came through their existing VC backers, which include Sequoia Capital, Norwest Venture Partners and Warburg Pincus in the case of Capillary, and Helion Venture Partners and Kalaari Capital for Simplilearn. Innoven sees these recommendations as vital to its prospects; however, it is also aware that its interests are not always the same as those of the VC community.

"Whereas VCs do get upside returns, our business is to look at downside protection and risk management," Hattangdi explains. "Of course we care a lot about whether a company becomes successful eventually, but we care a lot more about whether it can remain liquid and able to repay our loans for the next two or three years."

InnoVen believes this perspective makes it a valuable ally for VC investors whose portfolio companies need short term capital to support growth. GPs that come to InnoVen know the firm understands the short-term pressures that affect a start-up and can properly assess a company on those merits.

Meanwhile, on the companies' side, Hattangdi claims the trust it gives its clients is an important factor. Whereas banks or other investors might mandate that their capital be used for a specific purpose, InnoVen rarely attaches such strings, preferring to build rapport with the management team based on their overall character and execution abilities.

"Between the confidence that we have in the board and the management, we believe they know what they're doing. We know that they know their business better than we will ever know it," says Hattangdi. "And so we have a faith that we repose in the company, saying, ‘You guys can use it for whatever you want as long as you let us know what you're using it for.'"

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• Topics
• Southeast Asia
• South Asia
• Financing
• Venture
• Technology
• India
• TMT
• Structured finance
• Innoven Capital