Unicorn India Ventures, headed by M Damodaran, former Chairman of SEBI and UTI, has launched its first venture debt fund of Rs 600 crore. Besides Damodaran, Sudip Bandyopadhyay, a well-known investor, has joined the fund as a Managing Partner.
Startups are increasingly seeing venture debt funds as a better option that the equity funding options that abound. In particular, the ventures that are doing well and hope to grow fast and make profits would prefer this route. It is in some ways the equivalent of the traditional term-loan offered by the erstwhile institutional lenders to the industry.
Speaking on the occasion of the launch of the Unicorn Venturesâ€™ debt fund echoed almost similar sentiments. â€śThe capital structure of funds is lopsided with hardly any debt. We believe, it is the right time to launch a venture debt fund, as this asset class will sit alongside traditional venture equity,â€ť he said, adding that he was looking forward to working with Indiaâ€™s startup ecosystem and observe their growth in a balanced manner.
The underlying philosophy is that while the startups will have to bring in equity funding to affirm their commitment to the project and stay long term, there has to be a balanced funding pattern with debts also forming part of the financing for the venture, which can be retired in a planned manner as the venture gets into the growth track
â€śWhile running our first Venture equity fund, we realized the need for debt financing for startups. High levels of founder dilution, uncertain exit scenarios and limited financing options from Banks/NBFCs have made debt financing need-of-the hour for startup ecosystem,â€ť Managing Partner Bhaskar Majumdar added.
Unicorn India Ventures is a SEBI registered VC fund, whoâ€™s founding Managing Partners are Anil Joshi and Bhaskar Majumdar. The first fund was raised in 2015. This fund has invested solely or as co-investor in startups with innovative business ideas, which can solve real life problems. The deal size varies from $250,000 to $2 million.
From the first fund, Unicorn has invested in Boxx.ai, GrabonRent, Inc42, NeuroEquilibrium, Pharmarack, Sequretek, SmartCoin, VanityCube among others.