Federal Bank will anchor Unicorn India Ventures' maiden debt fund

Early-stage venture capital fund Unicorn India Ventures has brought on board Federal Bank as the anchor investor (limited partner) for its maiden venture debt fund.

The fund, which is targeting a corpus of Rs 600 crore, has been in talks with family offices and institutions having received soft commitments for up to Rs 200 crore so far.

While Unicorn India Ventures did not disclose the quantum of investment by Federal Bank, sources aware of the fund’s construct peg Federal Bank’s investment at about 10% or approximately Rs 60 crore, in line with anchor investors’ typical investment quantum in venture debt funds.

Unicorn India’s venture debt fund is expected to mark the first close of its fund by early November, a year after it was launched in November last year.

“The debt fund will be sector agnostic and largely focused on tech-enabled businesses. We would look at startups that are at a pre-series-A or series-A level; have raised capital from marquee venture capital investors while demonstrating a strong cash flow to serve the debt,” said Anil Joshi, managing partner, Unicorn India Ventures.

Federal Bank will anchor Unicorn India Ventures' maiden debt fund
The venture debt fund is looking to invest in up to 12 startups each year with the investments likely to begin once the fund makes its first close. The fund has already shortlisted two-three startups for potential investments and is likely to start writing cheques once the first close is achieved by the end of the year.

“The early-stage ecosystem is where the action is and over the last year, there is an increasing demand from entrepreneurs to raise debt for meeting their growth milestones, which the traditional lending system has been unable to meet.

We believe we can associate with these entrepreneurs and meet their debt needs by partnering with a likeminded team which we found at Unicorn India and decided to come on-board as an anchor for their debt fund,” said Ashutosh Khajuria, CFO, Federal Bank.

Unicorn India Ventures will make investments ranging between Rs 5-30 crore in startups across the consumer internet space with interest rates pegged at about 15% plus/minus 2% thus offering competitive rates to NBFCs but higher than traditional banks, a few of which offer debt financing in this space.

From its first equity fund, Unicorn India Ventures has invested in startups including VLCC VanityCube, Inc42, Sequretek, Pharmarack, GrabonRent, Inntot, Genrobotic, SectorQube, Perfit, NeuroEquilibrium, SmartCoin, Open, Boxx.ai and Clootrack.

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