In the face of COVID-19 where startups are facing unprecedented challenges with fund raising, Indian Angel Network, in partnership with Indifi Technologies, has announced the launch of a Growth Stage Debt Fund to help IAN portfolio companies get working capital. Indifi Technologies, one of India’s leading online lending platforms designed this initiative, aiming to provide growth debt capital to support start-ups to pull through the slowing economy & continue their business operations. A pioneer in seed and early-stage investing, IAN’s decision to launch a growth stage debt fund in collaboration with Indifi Technologies is in line with its strategy to mentor, guide and support business continuity among start-ups.

The announcement comes at a time when most of the businesses, especially startups are facing liquidity crunch due to an unforeseen situation that forced the entire country to be under lockdown for over two months. According to Nasscom, 70% of startups have cash reserves to last less than 3 months and 40% of startups have either temporarily halted operations or are in the process of shutting down, with around 70% having cash reserves to last less than 3 months.
Through this fund, Startups will be able to avail debt in the range of INR 10 Lakhs-2crore which will be a pure debt play based on the revenue pattern of the business and will benefit start-ups with no equity dilution or other equity-related rights for the lender. Depending on product structure and the growth periodicity of business, loan repayment duration will range between 18-36 months.

Alok Mittal, CEO & MD, Indifi Technologies commented, “The idea behind this partnership is to create support system aimed at accelerating the growth trajectory of new-age start-ups looking to adapt and excel during these difficult times. We are delighted to associate with IAN, an organisation that is committed to enabling and empowering the country’s start-up ecosystem.

The idea behind this partnership is to create support system aimed at accelerating the growth trajectory of new-age start-ups looking to adapt and excel during these difficult times.

Together, we will leverage the dynamic synergy to facilitate growth-enabling funds to help IAN portfolio companies seamlessly navigate the highly competitive and continuously evolving business landscape.”

Speaking on the collaboration, Padmaja Ruparel, Co-founder of Indian Angel Network said, “Several startups with a sound business model are struggling to keep up with their working capital needs due to a sudden impact on their business induced by COVID-19. We felt there was a requirement of a financial facility that addressed the needs of startups that did not want to dilute their equity at the moment. We are extremely delighted that in collaboration with Indifi Technologies, we have been able to launch this fund that aims to provide much-needed support to India’s startup ecosystem. This is the time to hand hold our companies and help them in every possible way that does not halt operations and ensures business continuity.”

The debt fund will provide support to startups in the business ofSaas, Direct-to-consumer online brands, Enterprise services, Edutech, Digital Media/ Advertising driven businesses, and Leasing businesses.

Among other criteria, startups in the B2B business applying for a loan should have minimum recurring revenue of over Rs 10 lakh per month, those in the B2C space should have a recurring revenue of over Rs 5 lakh a month. The eligible start-ups should also have at least 12 months of stable revenue history. The sanctioned amount of loan would be equivalent to 2-4X of monthly revenue, depending upon the margin profile of the business. Those businesses hit by COVID-19 should have had high growth rates in the range of 40-50% or more in the normal course of business.