VentureSoul Capital, a Sebi registered category II AIF (Alternate Investment Fund) floated by three former HSBC bankers, is raising ₹600 crore for its maiden debt fund focusing on the start-up ecosystem.
The anchor investor in the fund is healthcare company Micro Labs Ltd which is putting in 10 per cent of the fund.
It has received firm commitments from a bunch of HNIs (high net worth individuals) and family offices, including E Madhusudan (founder – Kreditbe), Glen Appliances Ltd, PSN group, Abhishek Khemka (promoter- Baazar Kolkata), Ponnuswami M (Pure Chemicals group), amongst others.
Speaking on the fund’s philosophy and investment mantra, Kunal Wadhwa, one of the partners, said the fund would invest in companies that are at Series A or beyond stage, with a demonstrated revenue model. “The sector agnostic fund will have a positive bias towards diversified fintech, B2C, B2B & SAAS companies,” he added.
Kunal and his partners Anurag Tripathi and Ashish Gala are looking to give 18-20 per cent return to their investors. The debt fund will also have a 10 per cent equity component which translates to about ₹60 crore. The fund will pick up small equity in entities where it will extend debt.
VentureSoul is looking to deploy the fund over the next six quarters in 20-25 companies. It plans to follow new-age credit evaluation technology to secure investment in the portfolio companies.
Debt funds for the start-up ecosystem assume significance as they often stumble to raise credit from traditional banking systems due to the high risk nature of the business. Instead, they typically depend on equity from venture funds and their own sources.
After a few years of euphoria, valuation of the start-ups crashed and funds grew cold feet to lofty valuations. In FY24, about $10 billion of equity and $1.1 billion of debt was deployed in the start-up ecosystem. Many like Kunal believe that the valuation has moderated and the new economy companies are now looking not only at the topline but also at profitability.
Consequently, the valuation may perk up in 3-4 years, allowing existing investors upside going forward.
