India is currently in the midst of a mini banking crisis of sorts. The reason for this is the unwinding of large, unsecured loans made by its public-owned banks to large businesses, most prominent among which include a jewellery brand, a pen maker and a PC maker. The size of the now-soured loans to these companies? $1.7 billion, $570 million and $80 million, respectively.

India’s startup ecosystem has been fuming.

Avlesh Singh is the founder and CEO of Webengage, a seven-year-old VC-funded marketing software maker headquartered in Mumbai.

Upasana Taku is the co-founder of MobiKwik, a nine-year-old digital payments company that has raised over $80 million in venture funding and has over 55 million users.

Shailesh V Singh is a venture capitalist.

“The bank debt ecosystem doesn’t exist for us,” says Webengage’s Singh. “Even our own bank, which knows us very well and with which all our business data has been sitting for nearly four years, doesn’t think we qualify for debt.”

Indian tech startups have largely internalised the lack of credit funding for them from traditional banks, whether private or public-owned. But in doing so, they’ve turned off an important source of funding that can help them complement their other sources, most notably, venture funding.

Does it have to be this way?

A High Bar for Credit

“Smart financial management is always about using the right source of capital for the right purpose. A mix of capital sources is always better,” says Paras Chopra, founder and chairman of Wingify, a bootstrapped SaaS (software as a service) company with over $10 million in revenue.

But standard practice among many, if not most, young tech startups in India has been to raise and spend what is arguably the most expensive capital—venture capital. It’s expensive because founders divest significant equity in order to access it.

One reason is that bank credit is hard to get.

“I’ve had multiple conversations with banks on the various filters they use to decide if they will give us a loan.

AUTHOR

Rohin Dharmakumar

Rohin is co-founder and CEO at The Ken. He holds an MBA from the Indian Institute of Management, Calcutta and an engineering degree in Computer Sciences from the R.V.C.E., Bangalore.

View Full Profile

Available exclusively to subscribers of The Ken India

This story is a part of The Ken India edition. Subscribe. Questions?

MOST POPULAR

Annual Subscription

12-month access to 200+ stories, archive of 800+ stories from our India edition. Plus our premium newsletters, Beyond The First Order and The Nutgraf worth Rs. 99/month or $2/month each for free.

Rs. 2,750

Subscribe
 

Quarterly Subscription

3-month access to 60+ new stories with 3-months worth of archives from our India edition. Plus our premium newsletters, Beyond The First Order and The Nutgraf worth Rs. 99/month or $2/month each for free.

Rs. 1,750

Subscribe
 

Single Story

Instant access to this story for a year along with comment privileges.

Rs. 500

Subscribe
MOST POPULAR

Annual Subscription

12-month access to 150+ stories from Southeast Asia.

$ 120

Subscribe
 

Quarterly Subscription

3-month access to 35+ stories from Southeast Asia.

$ 50

Subscribe
 

Single Story

Instant access to this story for a year along with comment privileges.

$ 20

Subscribe

Questions?

What is The Ken?

The Ken is a subscription-only business journalism website and app that provides coverage across two editions - India and Southeast Asia.

What kind of stories do you write?

We publish sharp, original and reported stories on technology, business and healthcare. Our stories are forward-looking, analytical and directional — supported by data, visualisations and infographics.

We use language and narrative that is accessible to even lay readers. And we optimise for quality over quantity, every single time.

What do I get if I subscribe?

For subscribers of the India edition, we publish a new story every weekday, a premium daily newsletter, Beyond The First Order and a weekly newsletter - The Nutgraf.

For subscribers of the Southeast Asia edition, we publish a new story three days a week and a weekly newsletter, Strait Up.

The annual subscription will get you complete, exclusive access to our archive of previously published stories for your edition, along with access to our subscriber-only mobile apps, our premium comment sections, our newsletter archives and several other gifts and benefits.

Do I need to pay separately for your premium newsletters?

Nope. Paid, premium subscribers of The Ken get our newsletters delivered for free.

Does a subscription to the India edition grant me access to Southeast Asia stories? Or vice-versa?

Afraid not. Each edition is separate with its own subscription plan. The India edition publishes stories focused on India. The Southeast Asia edition is focused on Southeast Asia. We may occasionally cross-publish stories from one edition to the other.

Do you offer an all-access joint subscription for both editions?

Not yet. If you’d like to access both editions, you’ll have to purchase two subscriptions separately - one for India and the other for Southeast Asia.

Do you offer any discounts?

No. We have a zero discounts policy.

Is there a free trial I can opt for?

We don’t offer any trials, but you can sign up for a free account which will give you access to the weekly free story, our archive of free stories and summaries of the paid stories. You can stay on the free account as long as you’d like.

Do you offer refunds?

We allow you to sample our journalism for free before signing up, and after you do, we stand by its quality. But we do not offer refunds.

I am facing some trouble purchasing a subscription. What can I do?

Please write to us at [email protected] detailing the error or queries.