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

Arundhati Ramanathan, 19 Mar 2019

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

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.

Now typically, venture debt lags behind venture capital in startup ecosystems around the world.

AUTHOR

Arundhati Ramanathan

Arundhati is Bengaluru-based. She is interested in how people use money in the digital age and how new economies will take shape based on that interaction. She has spent over 10 years reporting and writing on various subjects. Previous stints were at Mint, Outlook Business and Reuters.

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What’s eating venture debt in India?