Rahul Gupta, a seasoned banking professional, and Siba Panda, former fund manager at Stride Ventures, have jointly launched their inaugural venture debt fund, ValuAble, with a corpus of INR 850 Cr or $100 Mn.
With ValuAble, a sector-agnostic fund, both Gupta and Panda want to foster a sustainable, inclusive, and culturally enriched ecosystem that grants businesses access to responsible capital.
This Category II Alternative Investment Fund (AIF) will concentrate on early and growth-stage startups and is aiming to make over 30 investments at an average size of $3 Mn, Gupta told Inc42.
It will provide debt in the form of working capital, term loans, or a blend of both, with a repayment period spanning 18 to 24 months within a seven-year fund cycle.
Gupta has 17 years of banking experience. His impressive track record includes overseeing 12 Limited Partner investments, facilitating over $2 Bn in financing, establishing partnerships with global Development Finance Institutions, and leading the Carbon Disclosure Project Taskforce.
Panda, on the other hand, has been nurturing startups since 2008 and boasts more than two decades of experience in venture debt, fund management, and regulatory matters.
As a founding member of Stride Ventures, a rapidly growing venture debt fund in India, he played a pivotal role in fundraising, deal sourcing, portfolio management, and successful exits. In his tenure, he evaluated more than 3,000 deals and invested in over 80 of them.
Gupta and Panda, who met in late 2019, identified the gaps in the startup ecosystem. They recognised the need to create an inclusive ecosystem where diverse founders could thrive with equitable principles, ultimately breaking free from exclusion. They observed that founders from diverse backgrounds often lacked accessible capital to build meaningful businesses, and the discussions around “inclusion” and “culture” in companies were often superficial.
“It took almost three and a half years of contemplation, but in the past year, we had our ‘eureka’ moment, which resonated deeply. This is how ValuAble came to be, and our joint mission is to establish a ‘Bridge to Banking’ for modern companies,” Gupta added.
Three Key Pillars Of Investment: Sustainability, Returns and Sustenance
According to Panda, the investment thesis at ValuAble is primarily defined by sustainability, returns, and sustenance. The founders emphasise the fact that they are ultimately in the business of making money and delivering returns to their investors, which is non-negotiable.
The venture debt firm will invest in startups aligned with the United Nations’ Sustainable Development Goals (SDGs), addressing social issues like gender, climate, health & well-being, and startups working on Bharat’s deep-rooted problems. It will also focus on tech-led startups in sectors such as fintech, edtech, agritech, cleantech, consumer tech, and healthtech.
“We will not invest in certain sectors, such as alcohol, tobacco, gambling, even if they fall under skill-based games, as well as industrial businesses that are illegal,” Gupta said.
The founders are also determined to invest in startup founders without considering their backgrounds, education, or physical ability, and will solely focus on their ability to conduct business. Nevertheless, the fund will be mindful of governance matters and the functioning of all the companies while making any investments.
“The key focus of ValuAble is to drive investments into scalable, return-oriented businesses that can sustain themselves. All of this, while celebrating “inclusion” and “culture” and driving the philosophy of the ‘Greater Good’,” Panda added.
The Road Ahead
With this fund, the founders aim to achieve an annual return of 18% and currently have a robust deal pipeline comprising more than 15 startups across various stages, ranging from pre-Series A to Series C.
According to a survey conducted by the founders of the venture debt fund, 63% of startup founders are open to substituting over 20% of their next fundraising round with venture debt.
Indian venture debt investments experienced rapid growth, with a CAGR of 22% over the three years leading up to 2022, reaching nearly $1 Bn, as reported by BCG-Trifecta Capital earlier this year. The report projected that venture debt investments in India could surge to $6 Bn-$7 Bn by 2030.
Another report from BCG reveals that 63% of market players are willing to replace more than 20% of their fundraising with venture debt due to its advantages, including enhanced capital efficiency, operational discipline, and improved Return on Equity (RoE).
It’s worth noting that following the macroeconomic challenges and the onset of a funding downturn in 2022, venture debt funding has emerged as an attractive option in the Indian startup ecosystem for raising capital.
According to an analysis of Inc42 data, between 2021 and 2023, a total of 11 debt funds have been announced, with a combined capital commitment of $1.4 Bn from firms like Lighthouse Canton, Stride Ventures, Trifecta Capital, Varanium Capital, Anicut Capital, and Altera Capital.
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