This announcement comes amid a highly volatile startup investment environment, with large ebbs and flows of capital seen in the ecosystem. It demonstrates the trust placed by a variety of investors in the Trifecta Capital platform, its leadership shown in this fast-growing asset class, as well as the continuing strong performance across all three venture debt funds managed by Trifecta Capital.
While seeing strong and continued support from existing investors, the fund also saw participation from a variety of new investors including large global financial institutions, domestic conglomerates, banks, insurance companies, development financial institutions, public sector entities, and reputed family offices. A significant portion of Trifecta Venture Debt Fund - III was contributed by repeat investors, and the fund further expanded its global presence with twice the number of offshore investors, both individual and institutional, as compared to Trifecta Venture Debt Fund - II.
In this rapidly changing environment, Trifecta Capital has already invested INR 1,500 crores from Trifecta Venture Debt Fund - III in the last 21 months, and over INR 5,000 crores of venture debt cumulatively across all its venture debt funds. Given the slowdown in venture capital investing, the Fund has been very selective with new investments and has built a portfolio of high-quality businesses which include Zepto, The Good Glamm Group, Log9, Kissht, Stashfin, Cogoport, Bobble, Rebel Foods, Cashfree Payments, Rooter, Ripplr, BIRA, Wiz Freight, Biryani By Kilo, Jai Kisan, Infra.Market, Udaan, Arzooo, Fashinza, GlobalBees, EatFit, XYXX, Infinite Uptime, Entropik, Vayana Networks, Practo, Shadowfax, Chalo, BluSmart, Celcius and Captain Fresh to name a few.
With an investible corpus of INR 4,440 crores, Trifecta Venture Debt Fund - III has dry powder of nearly INR 3,000 crores. The firm endeavours to prudently invest this capital with an even higher bar in the quality of business that it works with. This focus on quality helps in smoothly navigating a macroeconomic environment which includes volatility in the equity investment pace, significant changes in regulatory and compliance obligations across industries, as well as a rapidly formalizing economy.
The credit quality of the portfolio of Trifecta Venture Debt Fund - III is exemplary, with 40% of the fund’s portfolio companies having already raised follow-on equity financing in the short period of 21 months since the first investment, despite the broader funding slowdown. Further, the median revenue growth rates across investee companies is very healthy at 60%+ annually. Key to this performance is the firm’s unwavering thesis on selection of businesses with strong moats, favourable demand supply dynamics, robust unit economics, high-pedigree founders and sound investor support. The fund will also focus on follow-on investments with well-capitalized companies and category leaders within the portfolio, ensuring long-term relationships while prudently mitigating any risks at a portfolio level.
Trifecta Venture Debt Fund III further has a healthy pipeline of near-term opportunities worth more than INR 800 crores across a curated cohort of start-ups. The funds expect to cross INR 6,000 crores of cumulative debt capital invested during the current financial year itself.
Trifecta Capital pioneered the nascent asset class of Venture Debt funds in 2015, by financing early growth and growth stage start-ups via the country’s first Venture Debt fund. With the successful final close of its third Venture Debt fund and based on its assessment of the market potential for prudent deployment in superior risk adjusted return opportunities, the firm expects to launch its fourth Venture Debt fund in early 2024. Earlier in the year, BCG-Trifecta Capital released a report entitled "Venture Debt: The Rising Tide of Credit in the New Economy". Based on the same, Indian Venture Debt investments have grown rapidly at 22% CAGR in the last 3 years to clock nearly 1 Bn USD as of CY22. This is projected to grow 8x to reach 6-7 Bn USD by CY30.
Aadit Palicha, Co-Founder and CEO, Zepto quoted "We had extensive discussions with the Trifecta Capital team to fine tune an efficient solution for financing working capital and capex, an essential use case for a commerce business like ours. What we did not realize then was the phenomenal value added over and above the venture debt once we began the relationship, as they helped us unlock networks, reach out to business partners and investors that were critical to our journey in building Zepto."
Darpan Sanghvi, Founder and CEO, The Good Glamm Group shared "We have had a highly productive multi-year relationship with Trifecta Capital, back from the days when we operated only a single brand. I congratulate them on closing Fund – III, and our business continues to leverage all their offerings of venture debt, growth equity and advisory solutions in our path to building a global content-to-commerce platform."
Akshay Singhal, Founder and CEO, Log9 Materials shared "Venture debt from Trifecta Capital along with our ongoing Series B round helped in having optimal leverage on our balance sheet. Further, this also helped in consolidating our debt book with cheaper sources of financing along with the desired tenors – setting a precedent to other lenders in underwriting the Log9 business."
Rahul Khanna, Managing Partner, Trifecta Capital said, "Trifecta Capital is proud to lead the charge in providing debt solutions to start-ups, at a time when they are faced with market volatility and when access to capital may be relatively constrained. Our clear focus on selecting great founders, businesses with sound unit economics and strong equity investor backing, have helped us deliver consistent returns from our venture debt funds and grow the asset class as a whole, despite all externalities. We will continue to be reliable partners to ambitious start-ups building sustainable businesses with a long term vision."
Nilesh Kothari, Managing Partner, Trifecta Capital said, "We are grateful to our investors who have supported us in achieving this significant milestone. We will endeavour to deliver best in class returns while at the same time focusing on preservation of capital that is a critical element of this asset class."
Trifecta Capital has now invested nearly INR 5,000 crores in 150 plus start-ups across Fund-I, Fund-II and Fund-III. The portfolio includes 21 Unicorns and more than 12 Soonicorns, with marquee businesses including Zepto, BigBasket, PharmEasy, Cars24, Vedantu, The Good Glamm Group, Infra.Market, ShareChat, Dailyhunt, Urban Company, CarDekho, Udaan, Rebel Foods, Atomberg, Ninjacart, NoBroker, DeHaat, Turtlemint, Servify, Livspace and Fashinza amongst several others.
