Venture Debt Crosses The Billion-Dollar Mark, Touches $1.2 Billion In CY23

India's Venture Debt (VD) market has crossed the billion-dollar mark, heralding a new era of financial innovation and strategic growth for the nation's startup ecosystem, according to the ‘India Venture Debt Report 2024’. 

The third edition from Stride Ventures highlighted the anticipated surge in cleantech deals, as stakeholders predict this sector to attract the most venture debt funding in 2024. This shift underscores a broader trend towards sustainable and environmentally conscious investments, aligning with global priorities and investor interests in green technologies. 

India's venture debt market has not only crossed the billion-dollar threshold but also demonstrated unparalleled growth amidst economic disruptions, reaching a record $1.2 billion in CY23—a 50% increase from the previous year. This surge, accounting for approximately 175-190 deals, reflects a robust Compound Annual Growth Rate (CAGR) of about 34% from 2017 to 2023, marking venture debt as a burgeoning asset class in India's financial landscape.

Ishpreet Singh Gandhi, founder and managing partner of Stride Ventures, said, “Venture debt in India, surpassing $1.2 billion in 2023, signals a shift towards strategic financing, propelling Indian innovation to global prominence. With the market poised to hit $1.8-2Bn by 2026, India's future in the global startup scene looks not just promising but unstoppable.”

Insights from the report reveal an evolving landscape of venture debt usage among founders, venture capitalists, and investors. There's a growing preference for one-stop debt solutions that offer comprehensive financial packages, simplifying the capital-raising journey for startups. 

Apoorva Sharma, managing partner of Stride Ventures added, “India's venture debt market is swiftly expanding, jumping from $800 million to $1.2 billion within a year, highlighting a seismic shift in investor confidence and strategic adoption. This surge is fuelled by thorough due diligence and the asset class's promise of resilience and returns. As both founders and VCs increasingly integrate venture debt to balance equity and growth, it becomes central to India's funding landscape, signifying a pivotal evolution in the startup ecosystem.”

This trend reflects the market's maturity and the increasing sophistication of venture debt solutions tailored to the nuanced needs of fast-growing and global-minded companies.  India's startup ecosystem, ranking third globally, secured $8 billion in VC investment in 2023, which is about 3% of the global venture capital market. Despite challenges, India's performance signals a critical evolution in investment trends and economic factors shaping the startup landscape.