alteria capital: Alteria Capital completes first close of third venture debt fund at Rs 1,000 crore

Venture capital debt provider Alteria Capital, which has backed Mensa Brands and Dunzo, launched its third fund (Fund III) with an initial close of Rs 1,000 crore, largely from domestic investors and soft pledges of institutions.

The size of Fund III is expected to be Rs 2,000 Crore and will close in the next two to three quarters.

The first closing of Fund III comes exactly one year after the announcement of the final closing of its second fund at Rs 1,820 crore.

“Although there is demand for risky debt, we don’t see the market doubling or tripling. It will still be linear growth, even if equity investments decline this year,” said Vinod Murali, co-founder and managing partner of Alteria Capital in an interaction with ET.

“From a capital supply perspective, we felt that our new 3A fund or venture fund A should ideally be the same size as our previous fund. A few thousand crores is fine from an output standpoint. If there is more demand, then there will be a shorter duration between new funds,” Murali added.

Alteria has returned the full corpus of Rs 960 crore to investors in its first fund, it said.

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The venture capital fund took the entire corpus from its second fund, investing it in startups. He continues to recycle the capital of the second fund.

“The time interval between Fund II and Fund III was shorter. But risk debt is a matter of discipline. So the bigger the size of the fund, the more likely you are to be tempted to be unruly in some way,” Punit Shah, managing partner at Alteria Capital, told ET.

Alteria is looking to close 120 to 150 deals with Fund III, writing checks averaging Rs 20 crore to Rs 22 crore, about the same as its previous fund.

It plans to draw on the entire corpus of Fonds III in about eight quarters.

In terms of sectors, Alteria will continue to support startups in healthcare, consumer brands, as well as electric mobility, agritech and reg-tech.

Fund III comes at a time when equity investment in Indian startups has stalled as global inflationary pressures and concerns over high interest rates have plagued public markets, sending global tech stocks into a rout.

“We started fundraising three months ago and closed Rs 1,000 crore. The reason why our LPs (limited partners) trust us is because we (as fund managers) have been through different cycles of these ups and downs in India. And our LPs have also seen different roles played by venture capital debt through different cycles,” said Ankit Agarwal, Managing Partner, Alteria Capital.

In the nine months to September 30, total private equity (PE) and venture capital (VC) investments in Indian startups fell to $20.4 billion from $24.8 billion. dollars at the same time last year.

The third quarter of the calendar year – from July to September – saw overall funding drop nearly 77% to $2.7 billion, from $11.9 billion year-on-year, according to company data. Venture Intelligence research.

“In markets like these, you can access very high quality names because they are also scared and would need capital as a buffer, despite the liquidity in their banks. So you end up in disproportionately precious,” added Murali.

Along with Fund III, Alteria is also closing a separate fund, dubbed “Scheme 3B”, which will have a target corpus of Rs 750 crore and a green shoe option of another Rs 750 crore, to provide working capital to startups.

Alteria has received the necessary approval from the capital markets regulator, the Securities and Exchange Board of India (Sebi), for the segregated fund.

“We just wanted to make sure that when founders go into debt for working capital, they expect a slightly cheaper product. There were also certain pockets of investors interested in this offering and this segregated fund will play out next year for us,” Murali said.

Founded in 2017, Alteria has backed over 100 portfolio companies, including Cars24, Niyo, EarlySalary and Zepto.

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