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Commitment phobia

What’s eating venture debt in India?

Interest in venture debt is on the rise, with the likes of Flipkart co-founders Sachin and Binny Bansal eyeing it as a serious investment. But in a growth-mad, equity-fed startup market, commitment-heavy debt is still a hard sell

19/03/19

Arundhati Ramanathan

Venture debt has taken its time to grow in India because startups are wary about taking on debt

Debt is seen like an onerous expense item among startups for whom growing on the back of venture capital is a way of life

Venture debt is mostly given to startups who are able to raise at least a Series A round

Large companies want to take on more debt but the availability of capital is a constraint

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Over the decades, legions of Indian businesses, big and small, have grown on the back of debt. But for startups chasing growth at all costs, debt is like a millstone around their necks. Unsurprisingly, in the past nine years, Indian startups have raised about $56 billion in venture capital, but only about Rs 3,300 crore ($481.3 million) in venture debt.

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