BCG+債務(wù)風(fēng)險(xiǎn)：新經(jīng)濟(jì)中不斷上升的信貸浪潮-54正式版

VENTUREDEBT:

THERISINGTIDEOFCREDITINTHENEWECONOMY

February2023

VENTUREDEBT:THERISINGTIDEOFCREDITINTHENEWECONOMY

BostonConsultingGrouppartnerswithleadersinbusinessandsocietytotackletheirmostimportantchallengesandcapturetheirgreatestopportunities.BCGwasthepioneerinbusinessstrategywhenitwasfoundedin1963.Today,weworkcloselywithclientstoembraceatransformationalapproachaimedatbenefitingallstakeholders—empoweringorganizationstogrow,buildsustainablecompetitiveadvantage,anddrivepositivesocietalimpact.

Ourdiverse,globalteamsbringdeepindustryandfunctionalexpertiseandarangeofperspectivesthatquestionthe

statusquoandsparkchange.BCGdeliverssolutionsthroughleading-edgemanagementconsulting,technologyanddesign,andcorporateanddigitalventures.Weworkinauniquelycollaborativemodelacrossthefirmandthroughoutalllevelsoftheclientorganization,fueledbythegoalofhelpingourclientsthriveandenablingthemtomaketheworldabetterplace.

TrifectaCapitalisIndia’sleadingalternatefinancingplatformforstartupsacrosstheirlifecyclewithtailor-madeVentureDebt,GrowthEquityandFinancialAdvisorySolutions.TrifectaCapitalservesmarketleadersandcategorycreatorsacrossB2B,ConsumerServices,ConsumerBrands,E-commerce,Mobility,Edtech,Agritech,FintechandHealthcare.

TrifectaCapitalpioneeredtheassetclassofVentureDebtFundsin2015,bylaunchingthecountry’sfirstVentureDebtFund.Ithassinceprovidedover$500MnofVentureDebtto150+startupsacrossitsthreeFunds.TheFunds’portfolioincludesmanyunicornsandseveralcategoryleadingbusinesseslikeBigBasket,Pharmeasy,Cars24,Vedantu,TheGoodGlammGroup,Infra.Market,Dailyhunt,UrbanCompany,CarDekho,Kreditbee,

BharatPe,Cure.fit,GlobalBees,IdeaForge,RebelFoods,StashFin,Open,Kissht,Ninjacart,Chalo,NoBroker,Turtlemint,Udaan,DehaatandLivspace.TrifectaCapitalVentureDebtportfoliocompanieshavecumulativelyraised$13.5Bnofequityandarecumulativelyvaluedat$54Bn.

AsofFebruary2023,TrifectaCapitalhasraisedover$600MnacrossthreeVentureDebtFundsandoneGrowthEquityFund.Tosupportstartups,theFirmhasalsobuiltacustomizedtechnologyandadvisoryplatformwithanAUAofover$300Mn.Sinceinception,TrifectaCapitalhasinvestedover$650MnacrossVentureDebtandGrowthEquityandaimstobethefinancialpartnerofchoiceforleadingneweconomycompaniesinIndia.ItcurrentlyhasofficesinNCR,Bengaluru,andMumbai.

VENTUREDEBT:SCALINGALONGWITHSTARTUPS 3

EXECUTIVE

SUMMARY

ThelastfewyearshavewitnessedrecordequityinflowsintotheIndianstartupecosystem,primarilyledbymacroeconomic,technological,andgeopoliticaltailwinds.Duringthesameperiod,VentureDebthasalsogainedpopularityamongIndianstartupsthatarelookingtoraisecapital.SinceCY19,theIndianVentureDebtmarkethasgrownat22%CAGRwithalmost$1BninvestedinCY22.ItsjourneyinIndiaisbeginningtomirrorthetrajectoryofthisassetclassobservedindevelopedmarkets.

Asfoundersgetmorefinanciallysophisticated,startupbalancesheetsarenowbeingdesignedtoincludedebtasaformoffinancing.Thishasalsobeenenabledbyahighernumberofdebtprovidersandintroductionofavarietyofproductofferings.Thisisevidencedbythefactthatdespitetherecentfundingwinter,VentureDebtisstillinhighdemandamongstartupfounders.

Weareatacrucialinflexionpointtoday.Whiletheimmediatefundingslowdowncanbeanacidtestfordebtinvestments,italsobringswithitanopportunityforfounderstochoosetherightinvestorsandforinvestorstoconsolidateinvestments.MacrotrendsindicatethatIndianVentureDebtinvestmentsaresettogrowto$6BnbyCY30.Additionally,withamorenuancedriskreturnprofile,increasedinvestorinterestindebtinstrumentsandhigherparticipationfromvariedcapitalproviders,theVentureDebtmarketcanpotentiallyleapfrogto$10BnbyCY30.Thiswouldimplya10%shareofprojectedVCinvestments,whichisclosertotheVentureDebtpenetrationseeninmoredevelopedmarketssuchastheUS.

Inthisreport,wedelveintotheIndianVentureDebtjourneysofar,prevalentusecases,insightsfromthestartupecosystemondebtfinancingandtheroadahead.

Aspartofthereport,weconnectedwith40+startupfoundersandoneofthekeythemesthatstoodoutwasthelimitedawarenessofVentureDebtasaformoffinancing.Thishasbeenoneofthemajordeterrentsinthegrowthofthisassetclass.Foundershavebeenhighlydependentontheirexistingnetworkstogetintroducedtodebtoptions.Eventoday,VentureDebtispredominantlyrecommendedandroutedthroughequityinvestors.However,founderswhohavetakenVentureDebtexpressednumerousbenefitssuchasdealexecutionspeed,availabilityoflargeramountsofcapital,flexibilityofrepaymenttermsandwidereligibilityforcredit.

TherearepredominantlyfiveusecasesofdebtfinancingthathavebecomepopularinIndianstartups:

?1 Growth:Expandintonewgeographies,deepenfootprintinexistinggeographies,launchnewproductsornewbusinesses.

?2 M&AFinancing:Boostinorganicgrowthbyacquiringfirmsoperatinginexistingorcomplementarybusinesses.

?3 CapexandProjectFinancing:Meetcapexrequirementssuchaspurchaseofnewwarehousesormanufacturingfacilities,machineryupgrades,strengtheningexistingsupplychain,etc.

?4 WorkingCapitalFinancing:Addressworkingcapitalrequirementsofoperationalexpensessuchaspurchasingrawmaterials,financingreceivables,etc.

?5 OnwardLending:ProvidefundstoFintechsoperatinginthelendingspacetobuildouttheirloanportfolio.

Recognizingthisopportunity,bankshavealsoforayedintoprovidingbankingsolutionsandservicescustomizedtotheneedsofstartups.

VENTUREDEBT:THERISINGTIDEOFCREDITINTHENEWECONOMY

Inaddition,banksaregraduallygettingintoofferingsomeformsofcredittostartupsaswellincludingselectproductssuchasworkingcapitalloans.RegulatorysupporttoenableflexibilityinunderwritingandrepaymentnormscanhelpdrivefurtherparticipationofbanksintoIndia’sVentureDebtecosystem.

Interestforprivatecreditandalternativeinvestmentshasalsoincreasedamongdifferentcategoriesofinvestorsinthelast5years.Predictablecashflows,anattractiverisk-returnprofileandpotentialforequityupsidehasledtoasizableallocationofVentureDebtwithinalternativeinvestmentportfolios.Asoftoday,thepreferredmodeofengagementformostindividualandinstitutionalcapitalprovidersisthroughspecialistfunds.

VentureDebtinvestmentscatertodifferentkindsoflimitedpartnersindifferentways:

?1 Insurancecompanies:PredictablereturnsandregularcashflowsfromVentureDebtsupportsforward-lookingestimationforinsurancecompanies.

?2 Endowmentfunds:RegularcashflowsprovidedbyVentureDebtinvestmentshelpmanageoperationalexpensesofendowmentfunds.

?3 HNIsandfamilyoffices:VentureDebtenablesriskdiversificationinthealternateinvestmentportfoliooffamilyoffices.Italsohelpstraditionalbusinesshousesinexploringinvestmentsinnew-agebusinesses.

?4 DevelopmentFinanceInstitutions:Italignswiththeobjectivesoftheseinstitutionstoexpandtheavailabilityofcredittothestartupecosystemthathaslargelybeenunder-servedbytraditionallenders.

?5 Banks:Presentunderwritingmodelsdonotalignwithstartupbusinessmodels.VentureDebthelpsbuildstartups’credithistory,therebymakingthemgraduallyeligibleforbankloans.

Asbothglobalanddomesticinvestorsconsiderincreasingtheirportfolioallocationtowardsprivatecredit,VentureDebthasemergedasoneoftheleadingsegmentsdrivingtheseinvestments.

ThefollowingleversofdemandandsupplywillpropelthenextwaveofgrowthinVentureDebt.

Enablersforgrowthindemand

Increasedawareness:Higherawarenessamongstartupfounders,venturecapitalprovidersaboutproductfeatures,usecasesandaccessibility.

Productinnovation:Tailor-madesolutionstosolveforspecificfinancingneedsofastartup,beyondtraditionaldebt.

Increasedcollaboration:DeeperrelationshipsofVentureDebtproviderswithotherinvestorssuchasVenturecapitalfirms,Banks,NBFCs,PrivateCreditfunds,etc.toleverageeachothers'strengthsindistribution,costofcapital,etc.

Enablersforgrowthinsupplyofcapital

Broadenedinvestorpool:AwiderarrayofinvestorsinVentureDebt,suchasglobalinstitutions,willhelptofulfillincreasingcapitalneedsoftheecosystem.

Increaseinallocation:AsteadytrackrecordofperformanceofVentureDebtfundsacrossvintageswillpowerhigherportfolioallocationstowardsVentureDebt.

Withtheaboveenablersandcontinuedregulatorysupport,VentureDebtiswellplacedforanexponentialgrowthtrajectory.ItisanassetclasswhosetimehaswellandtrulycomeinIndia.

VENTUREDEBT:SCALINGALONGWITHSTARTUPS 5

BCG+TrifectaCapital

TABLEOF

CONTENTS

VENTURE

CURRENT

THENEXT

DEBT:SCALING

LANDSCAPE

HORIZON:

ALONGWITH

AND

UNLOCKINGTHE

STARTUPS

PERCEPTIONS

FULLPOTENTIAL

08–15

16–45

46–51

VENTUREDEBT:SCALINGALONGWITHSTARTUPS 7

BCG+TrifectaCapital

VENTUREDEBT:

SCALINGALONG

WITHSTARTUPS

HowcreditisbecomingmainstreamforIndianstartups

VENTUREDEBT:THERISINGTIDEOFCREDITINTHENEWECONOMY

IndianVentureDebtinvestmentsrapidlygrowingtoreach$1Bnp.a.

VentureDebtinvestmenthasgrownat22%

Amountin($Bn)

+22%

0.87

0.80–0.85

CAGR

0.46

0.26

CY19 CY20 CY21 CY22E

Over100dealsclosedinCY22

Deal

Averageticket

count

sizein$Mn

CY22E

100–120

7–7.5

CY21

94

9.3

COVID-19impact

CY20

58

4.5

CY19 76 6.1

3keyfactorsfor

rapidgrowth

Seculargrowth:

IncreaseinYoYventurecapitalequityinvestments

Cyclicalgrowth:EquityslowdownfromQ2ofCY22onwardsledtohigheradoptionofalternativefinancingoptions

DemandSupply

Growth:

Increasedawarenessandaccesstonon-dilutivesources

Whenwestartedoutintheearly2000s,therewere

noavenuesfornewindependentbusinessesinIndia

—RajeevAgrawal,

toraisedebtinanyform.However,asafounder,Iam

Founder,Innoviti

gladtonotethatthishaschangedcompletelytoday.

Note:Datacomprises~380discloseddealscomprisingdebtdisbursementsbyprominentdomesticandforeigninvestors;excludes$860MnindebtfundingraisedbyOyoRoomsCY21CY22dataestimatedbasisdealactivitybytop4VentureDebtfunds

Source:VentureIntelligence;Tracxn;BCG-TrifectaFounderInteractions;BCGanalysis

offinancing

VENTUREDEBT:SCALINGALONGWITHSTARTUPS 9

Avarietyofstartupsconsideringdebttooptimizecostofcapital

Raised~$100MnindebtintheirregisteredNBFCforthepurposeof

onwardlending

StashFin

?ThisincludedseveraldebtprovidersacrossVentureDebtplayers,

NBFCsandevenglobalpoolsofdebtintheformofECBlines

? Raised~$30MninCY22frommultipleVentureDebtplayerstowards

strategicinvestmentsandacquisitionofadjacentfoodbrands

RebelFoods

?Zeptoraised~$20MnVentureDebtinCY22tofinanceworking

Zepto

capitalrequirementsandoveralloperationalgrowth

Source:BCG+Trifectaanalysis

VENTUREDEBT:THERISINGTIDEOFCREDITINTHENEWECONOMY

FoundersdisplayinterestinVentureDebtaspartoftheirnextfundraise

Top5Sectors

Fintech/Insurtech

Consumergoods/

66%

ConsumerTech

Healthtech

SaaS

Logistics

Respondentsinterested

inraisingVentureDebtin

next12–24months

Wehaveraiseddebtactivelyinthepastandcontinue

toleverageappropriatelyforanyplannedcapitalraise.

—SouvikSengupta,

Ithelpsusdrivecapitalefficiency,operatingdiscipline

Founder,Infra.Market

andimprovedRoE.

Source:BCG-TrifectaVentureDebtSurveywithFounders2022(N=35);BCG-TrifectaFounderInteractions;BCGanalysis

63%ofplayersarewillingtosubstitute>20%oftheirnextfundraisewithVentureDebt

23%playerswanttoraise$10–20Mnindebt

14%wanttoraise>$20Mnindebt

VENTUREDEBT:SCALINGALONGWITHSTARTUPS 11

USVentureDebthasscaledsubstantiallyinthelastdecade

VentureDebtpenetrationat17%ofVCinvestmentsbyvalueand19%bydealcount,averagedoverthelast5years

Investmentsin$Bn

-

342

300

-

2,780

2,683

3,036

2,618

2,415

2,176

2,139

2,048

200-

1,714

167

238

1,406

1,184

145

146

100-

73

86

83

89

42

50

17

26

33

34

33

32

0

-

7

8

11

15

15

CY12

CY13

CY14

CY15

CY16

CY17

CY18

CY19

CY20

CY21

CY22

%ofVC

ByDealValue

18%

16%

16%

20%

18%

17%

18%

23%

20%

10%

13%

ByDealCount

15%

14%

16%

19%

20%

19%

20%

22%

21%

17%

17%

Dealcount

4,000

3,000

2,000

1,000

0

17%

19%

VentureDebtdealcount

VentureDebtinvestments($Bn)

VentureCapitalinvestments($Bn)

Average(CY18–22)

CY21:VentureDebtpenetrationdroppedasVCflows

VentureDebtdealswithticketsize>$100Mnhave

hitahistoricalhighat$342Bn;doublingfromCY20

grown2xsinceCY20and5xsinceCY18

Pitchbookdefinition

VentureDebtProvider:Banks,aVentureDebtfund,oranyothertypeofinvestorthatprovidesdebt-financingtoaventure-backedcompany

VentureDebtUser:Venture-backedcompanies,thathavecompletedatleast1VCdealandhavenotsubsequentlyundergoneanIPO/PEBuyout/Acquisition

Source:PitchBook-NVCAVentureMonitor2022;BCGanalysis

VENTUREDEBT:THERISINGTIDEOFCREDITINTHENEWECONOMY

USVentureDebtinvestmentsseegreatertractioningrowthstages

AverageVentureDebtticketsizeforgrowth&expansionstagefirms($Mn)

+8%CAGR

Growthstage

$21.2

$22.9

$23.3

$12.6

$12.5

$13.3

CY12

CY14

CY16

CY18

CY20

Q2CY22

Growth&Expansion

(SeriesCandbeyond)

EarlyStage

DealcountCY21

1,274

ticketsize:

Average%

$13Mn

27%

VentureDebtvs.

VCticketsize

Source:PitchBook-NVCAVentureMonitor2022,BCGanalysis

Growthstageticketsizesincreasedoverlast2–3yearsdespiteoverallmarketremainingstableat$32Bn

However,higherconfidenceinlargerfirms

Earlystageticketsizesat$13MninCY22i.e.almosthalfofgrowthstageticketsize

VentureDebtticketsizeasa%ofVCticketsize(27%)higherforgrowthvsearlystage(20%)

VENTUREDEBT:SCALINGALONGWITHSTARTUPS 13

IndianVentureDebtinvestmentsalsofocusedacrossgrowth&expansionstagefirms

Whatwasyourfirm'sstagewhenyouraisedVentureDebt?

%respondents

Earlystage(uptoseriesA)

27%

Growthstage(seriesB&C)

35%

Expansionstage(seriesD&Eonwards)

35%

Latestage(seriesFonwardsorpre-IPO)

3%

Risksatthisstageoftenincludeconceptrisk,bestfundedbyequity

70%

VentureDebtraisedacrossgrowthandexpansionstagestartups

AscompaniesprepareforlistinginIndia,bankinglinesbecomereadilyavailable.Moreover,latestagedebtisstillnascentinIndia

Oneofourmostimportantfinancialdecisions,thatwetookearly,wastooptimizeourcapitalstructurewithVentureDebt.Atfirst,itservedasanadditionalbuffertomeetunexpectedcontingencieslikedemonetization,whilelaterwefoundspecificusecaseswhichwerestructurallybestfinancedwithdebt.Itstermsalsoallowedustoretiretheobligationattheappropriatetimeinourgrowthjourney.

—AnujSrivastava,Founder,Livspace

Source:BCG-TrifectaVentureDebtSurveyforFounders(N=35),BCGanalysis,BCG-TrifectaFounderinteractions

VENTUREDEBT:THERISINGTIDEOFCREDITINTHENEWECONOMY

VentureDebtinIndiaisledbyFintech,Consumersegments

%shareofdealcountinCY221

Consumerproduct

&services

Fintech

B2Bservices

Healthcare

Transportation&

logistics

Agritech

E-commerce

Edtech

29%

19%

13%

12%

9%

7%

6%

5%

Notablestartups

TheGood

Atomberg

GlammGroup

Stashfin

Paperboat

Rebel

Rupifi

JaiKisan

VentureDebthelpsraisecapitalwhilemanagingdilution.WehaveactivelyleveragedVentureDebtforthestrategicgrowthofourbusiness,whetheritisforworkingcapitalortohelpfinanceinorganicinitiatives.

—DarpanSanghvi,

Founder,TheGoodGlammGroup

CY22dataestimatedbasistopcontributingVentureDebtfunds

Source:VentureIntelligence;BCG-TrifectaFounderInteractions;BCGanalysis

VENTUREDEBT:SCALINGALONGWITHSTARTUPS 15

BCG+TrifectaCapital

CURRENTLANDSCAPEANDPERCEPTIONS

Usecases&valueproposition

2A.VentureDebtUseCases 2D.Perspectives:Investors

2B.VentureDebtValueProposition 2E.TheEvolutionofVentureDebtinIndia

2C.Perspectives:Banks

1616 VENTUREVENTUREDEBT:DEBT:THETHERISINGRISINGTIDETIDEOFOFCREDITCREDITININTHETHENEWNEWECONOMYECONOMY

3typesofnonconvertibledebtoptionsavailableforstartupsinIndia

Nonconvertibledebt

Earlystage

Growthstage

Latestage

Description

Revenue-basedfinancing

Flatfeeappliedonthetotaldebtamount

Repaymentaspercentageofmonthlyrevenue

Noequityparticipation,boardseats,etc.

VentureDebt

VentureDebtisabespokedebtproductcombiningcouponandequityparticipation

Offerslargerticketsizeswithlimitedrestrictionsonend-use

Acomplimentary,mediumtolongtermcapitalforgrowthstagestartups

Preferredbystartupshavingpredictablecashflows

BankLoans

Traditionaldebtinvestmentsbyprivateandpublicsectorbanks

Firmswithadequatecashreservespreferred,suchasmaturebusinesses

Traditionalframeworks®ulatoryguidelinesleadtolimitedflexibilityonterms

Costeffective,helpsbuildscalablerelationships

Convertibledebt

DebtInvestmentswhichcanfullyconverttoequityatalaterstage

Conversionattheendofadefinedperiodorattheoccurrenceofaneventlikeafutureequityround

Accessibletostartupsacrossallstages

Convertiblenotes

Source:BCG-Trifectaanalysis

CURRENTLANDSCAPEANDPERCEPTIONS 17

Detailedstructureofthe3nonconvertibledebtoptions

Earlystage

Growthstage

Latestage

Revenue-based

VentureDebt

BankLoans

Financing

Typicaldebt

Klub,Velocity,

VentureDebtfunds

TrifectaCapital,InnoVen,

provider

GetVantage,N+1

AlteriaCapital,Stride

Special

Monthlyrecurringrevenue

PriorVCfunding

requirements

Size

25–30%ofannualturnover

Typically20–30%ofequity

roundoravailablecash

Collateral

CashFlows

Assets/IP

PSUandprivatebanksICICIBank,HDFCBank,RBL,HSBC

Amountofcash/cashreservesandthestageofthecompany

Dependsonfinancialhealth

20–25%ofturnover

AssetsandIP

CashcollateralintheformofFDorMutualfund

Maturityperiod

6–24months

Interestrate

Effectively20–25%

Equity

Notmandatory

Participation

Repayment

Predefinedfundingtimelines&

structures

sharedalignmenttowardsgrowth

Keybenefits

Fasterfunding,minimalsecurity

18–36months

13–15%

Typically8–12%ofdebtamount

Amortizingwithorwithoutmoratorium

Revolvingcreditfacilities

Minimaldilutionoptionforfulfillingstrategicgrowthplans

Overallcostofcapitalgoesdown

Workingcap:Yearlyrenewal

Capex:2–3years

Banks:9–12%

NBFCs:13–15%

None

Workingcapital:Flexibledrawdowns

monthlyinterestpaymentMostoptimalcostofcapital

Steadyandeasilytracked

Institutionalequitybacking

WorkingCapitalandcapexfunding

Enablers

revenueswithfullvisibilityinto

requirementsformaturebusinesses

&stronguniteconomics

channelsales

orthosewithabilitytooffercollateral

Source:BCG-Trifectaanalysis

VENTUREDEBT:THERISINGTIDEOFCREDITINTHENEWECONOMY

Whatis

VentureDebt1

DebtInvestmentcuratedtothecompany’sneedsandgrowthplans

Flexiblepaymentstructuresandcustomizedoptionsavailable

Offerscapitalwithlimiteddilutiontofounders

WhoareVenture

Debtproviders

Globally,debtprovidersspanacrossbanksandnon-bankingorganizations

VentureDebtfunds,typicallystructuredasAIFsregulatedbySEBI,arethemostsignificantdebtproviderstostartupsinIndia

NBFCsaregraduallyemergingasanothersegmentofdebtprovidersinIndia

WhichcompaniescanavailVentureDebt

Fundingstatus:

Atleastoneroundofinstitutionalfunding

ShouldnothaveundergoneanIPO,PEbuyout

oracquisition

Privatecompanies,backedbyVCorPEinvestors,canraiseVentureDebt

Typicalbusinessstage:

Revenuegenerating

Postproductmarketfitstage

VentureDebtcanbeavailedaspartofafinancingroundorin-betweenrounds

ExamplesofstartupsthathaveraisedVentureDebtintherecentpast

DefinedasperPitchbookandBCGanalysis

Source:BCG-Trifectaanalysis

Stashfin

RebelFoods

Globalbees

Udaan

Cogoport

BluSmart

Shadowfax

Toddle

Builder.AI

JaiKisan

Infra.Market

TheGood

Cars24

Zepto

Fashinza

GlammGroup

CURRENTLANDSCAPEANDPERCEPTIONS 19

FounderspreferVentureDebtoverotheravailabledebtoptions

63%

RespondentspreferVentureDebtover

otherdebtfinancingoptions

Revenue-basedfinancing:

AmountofcapitalavailableislowerthanVentureDebt

Attractsfirmswithsteadymonthlyrevenues

suchassubscriptionbasedbusinesses

Themindsetofaninvestorisverydifferentfromthemindsetofadebtprovider.ThebestVentureDebtfundsareabletomarrythebestofbothtodelivercapitaltousathighspeedandwithanoptimalriskappetite.

—AlokeBajpai,Co-founder,Ixigo

BankLoans:

? Tailoredformore

maturebusinesses

? Cashcollateralinvolved

? Usuallytermloansare

notavailabledueto

enduserestrictions

andrelativelylower

ForourbusinesswechoseVentureDebt,giventhatthequantumofdebtandthepurposethatweneededitfor,itwasrelativelydifficultwithbanksduetotheircomparativesubduedriskappetiteandprocesscomplexity.

—AtulShinghal,Founder,Scripbox

riskappetite

Source:BCG-TrifectaVentureDebtSurveywithFounders2022(N=35)

VENTUREDEBT:THERISINGTIDEOFCREDITINTHENEWECONOMY

BCG+TrifectaCapital

2A.VentureDebtUseCases

CURRENTLANDSCAPEANDPERCEPTIONS 21

5keyusecasesofVentureDebtareprevalentinIndia

Usecase

Forexample

Deepdive

Strategicrationale

1

Growth

2

M&A

Expandtonewgeographies,newofferings

financing

G.O.A.T.

Curefoods

Builder.ai

Livspace

BrandLabs

GlobalBees

Ixigo

Cars24

Cuemath

TheGoodGlammGroup

Full-stack

Content-to-

The

commercefor

Cars24

e-commerce

Good

retailcosmetic

platformfor

Glamm

andpersonal

usedcars

Group

careproducts

?Expansioninexistingandnew

?Create“digitalHUL”style

geographiesacrosstheworld

consortiumofbrands

?Capitalneededfor

?Timelyacquisitionsof

maintenanceofusedcar

complementaryfirms;

inventoryatvariouslocations

realizemarketing&

pan-India,typicallyas

distributionsynergies

workingcapital

3

Capex&Project

financing

Furlenco BOX8

Innoviti BigBasket

Largestonline

Big

foodandgrocery

store;operates

Basket

in30+cities

acrossIndia

Setupnewwarehousesandprocessingfacilityforfruits&vegetables

Strengthenthecold-chain

Result

Source:Trifectaanalysis

Raised$800Mn+insubsequentequitycapital

Presentin5countriesacrosstheglobe

Acquisitions:

Contentplatforms:PopXO,ScoopWhoop,MissMalini,Winkl&Vidooly

Personalcare:St.Botanica&OrganicHarvest,MomsCo,BabyChakra

Rampedupsupplychaininfrastructure;helpedservicethedemandsurgeduringmultipleCOVIDrelatedlockdowns

VENTUREDEBT:THERISINGTIDEOFCREDITINTHENEWECONOMY

5keyusecasesofVentureDebtareprevalentinIndia

4

5

Usecase

Workingcapitalfinancing

Onwardlending

Forexample

Cashify.in

Blowhorn

BharatPe

Infra.market

Kissht

Shadowfax

Bizongo

KreditBee

Deepdive

Strategicrationale

Result

Infra.

B2Bplatformwithfullstack

managedmarketplacefor

Market

constructionmaterials

Low-costcapitalbetterforworkingcapitalintensivebusiness

Procurementofconstructionmaterials&financingofreceivablestosupplementtherapidgrowth

16xgrowthsinceraising1stroundofVentureDebt

Workingcapitalcycleremainedconstantasvariousformsofdebtfinancedincrementalscale

Creditledfintechcompany;offersKisshtinstantloanstoindividuals&

smallbusinesses;forayedinto

payments&insurance

Otherdebtproviderswereslowerandofferedsmalleramountsofdebt

PostCOVIDgrowthgoals:

ScaletheNBFCbook

Collaboratewithmoreproviders;achieve2xleverage

Achievedleverageatscale

Expansiontotier-IIcitiesandtowns;rampupofflinepresenceviafacilitationcenters

Longtermpartnershipwithdebtproviders

Source:Trifectaanalysis

CURRENTLANDSCAPEANDPERCEPTIONS 23

StartupsraiseVentureDebtlargelyforfinancinggrowthandworkingcapitalneeds

Venturecapital:Topreasonsforraisingfunds

VentureDebt:Topreasonsforraisingfunds

%share

%share

Productdevelopment/newproductlaunch

Operationalexpansion

Customeracquisition

Personneland

Teamexpansion

Workingcapital

financing

CapexandProject

financing

M&Afinancing

Onwardlending

71%

66%

57%

40%

34%

26%

17%

6%

55–70%

firmsused

fundsfor

newproduct

launch,

operational

expansion

andbranding

activities

Growthfinancing

Workingcapitalfinancing

Optimizeequitydilution

M&Afinancing

Operationalexpansion

VCswerenotwilling/abletoinvestatthatpointoftime

38%

31%

15%

8