Startups in India have been looking towards venture capital for financing in the absence of traditional bank loans. And while InnoVen Capital is a top provider of that capital, it’s now looking to facilitate startups’ search of traditional financing by teaming up with other lenders.
Reports Wednesday (Jan. 4) said InnoVen Capital is partnering with both traditional banks and alternative finance players, like RBL Bank, IndusInd, Standard Chartered, Tata Capital and SIDBI, to provide credit to existing startup customers.
“Our existing clients need traditional debt for working capital, leasing equipment or extending back guarantee to vendor,” explained InnoVen Capital India CEO Ajay Hattangdi. “We help the clients by matching them up with banks on the other side and spend time with the banks to explain what the company does and to facilitate a loan for these cases.”
But finding traditional financing for startups is no easy feat considering these young businesses lack credit histories and proof that they can repay those loans.
“In some cases, banks are not comfortable taking credit exposure on these companies,” Hattangdi explained. “In such situations, we broadly do credit enhancement. InnoVen backstops a part of the facility in the form of corporate guarantees, which ensures that growth-stage companies are able to transition to conventional debt in tandem with their capital expenditure or operational needs.”
Several deals for traditional financing have already been secured through the initiative, reports said.
InnoVen Capital’s portfolio ranges across consumer and B2B startups in payments, eCommerce, data analytics, finance and more.