New Delhi, Nov 14 (SocialNews.XYZ) India’s venture debt market is growing steadily, mirroring the early days of venture capital, especially in emerging startup sectors such as fintech and vehicles electric (EV), according to a report published Thursday.
Indian founders are increasingly turning to venture debt to plug funding gaps and avoid excessive equity dilution, according to the report by global investment institution Lighthouse Canton.
This change is mainly due to the scarcity of equity financing in the market and the desire to preserve ownership while accessing the capital necessary for growth.
The report states that the main reason founders prefer venture debt over traditional debt and equity is its less dilutive nature (40 percent), with flexibility in repayment schedule also being an important factor (30 percent).
This preference reflects a growing recognition of the strategic advantages that venture debt offers, particularly in capital-intensive and rapidly evolving sectors.
“The Indian startup ecosystem holds immense potential, and the growth of venture capital funding plays a pivotal role in its development,” said Sanket Sinha, Managing Director and Global Head of Asset Management at Lighthouse Canton.
“We believe that this mode of financing will be essential in fostering innovation and empowering startups, which will ultimately generate sustainable growth in the country’s dynamic and evolving business landscape,” he added.
India’s fintech sector, now the third largest in the world, continues to be a major driver of venture debt adoption. Innovations such as UPI have propelled India’s fintech market forward, with venture debt playing a vital role in helping fintech startups manage their cash flow, support onward lending and fuel their growth.
The electric vehicle sector, capital-intensive and facing unique challenges, has also become heavily dependent on venture debt to drive growth.
According to the report, about 67% of electric vehicle startups rely on venture debt for more than half of their debt financing.
“With traditional lenders like banks often viewing the electric vehicle sector as high risk, subprime debt provides a vital alternative,” the report said.
Source: IANS
About Gopi
Gopi Adusumilli is a programmer. He is the Editor-in-Chief of SocialNews.XYZ and Chairman of AGK Fire Inc.
He enjoys designing websites, developing mobile applications and publishing news articles on current affairs from various authenticated news sources.
When it comes to writing, he enjoys writing about current world politics and Indian films. His future plans include developing SocialNews.XYZ into a news website with no bias or judgment towards any.
He can be reached at gopi@socialnews.xyz