InnoVen Capital, India’s venture debt firm, recently launched InnoVen Credit Assistance Program (InnoVenCAP) aimed at maturing startups that could use conventional debt financing to help optimize cash flow. Since September 2016, InnoVen has made available over $4.5 Million of credit lines in aggregate to select portfolio companies from partner banks, with part of the risk being backstopped by InnoVen – the primary lender to these ventures. The startups that have benefitted from this initiative so far include Chaipoint (tea-retail chain), Koye Pharmaceuticals (generic drug maker), K12 Techno Services (school management company), MoveInSync (employee transport solution) and Capillary Technologies (omni-channel retail analytics company).
InnoVen has helped these companies meet their working capital or capital expenditure needs, to improve cash flow efficiencyfor startups that may not necessarily have positive operating cash flows at this stage, making it difficult for them to access conventional methods of debt financing.
InnoVen has partnered with largefinancial institutions such as IndusInd Bank,RBL Bank, Standard Chartered, and Tata Capital for providing working capital or other structured solutions to InnoVen’s portfolio companies. InnoVen provides corporate guarantees to their partner banks and NBFCs, which in turn extends various facilities like Working capital facility, Bank guarantees, Operating lease arrangement etc. to the companies based on the comfort provided by InnoVen Capital. The firm also collaborates with SIDBI by referring and endorsing young companies for potential financing under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) Scheme.
With InnoVenCAP, the firm has established itself as a ‘Knowledge Partner’ for both banks and startups where it leverages its extensive experience in the venture debt space to bridge the gap of risk perception and credit appetite of banks. It also acts as a guide for companies looking to raise conventional debt but are not fully aware of the options, sources, or existing benchmarks for the same.
Commenting on the facility for Chaipoint, Amuleek Singh Bijral, Founder& CEO said, “What I valued was that Innoven worked proactively for a small company like ours. They literally led us towards operating lease structures that saved us lot of upfront cash.”
Ajay Hattangdi, Group COO & CEO India adds, “Our role is to leverage off our understanding of our clients’ businesses and serve them with risk capital which is appropriately structured to their stage of development. In most of the cases, and especially where the borrower is an early stage company where a different skill set is needed to underwrite the risk,InnoVen Capital might provide a venture loan directly to the client. In other cases, this could mean helping our clients tap into more traditional banking products or asset based financing solutions through our partner banks and lenders. These are financing options that lenders have traditionally made available only to mature companies. In such cases, we may need to backstop a part of the credit risk to help our lending partners get comfortable with the credit underwriting. We may also play an active role in helping the lender understand the key aspects of the credit and tailor debt structures that track the company’s loan repayment ability. Our approach in combining our direct lending ability with that of our lending partners ensures that growth stage companies are able to transition to conventional debt in keeping with their evolving capital expenditure or working capital needs”
InnoVenCAP is the latest addition to the host of initiatives driven by InnoVen Capital as an active player in the startup community. Last quarter, the firm organized several InnoVenConnect and InnoVenSupport events across Mumbai and Bangalore, where by leveraging their network of founder and VC relationships as well as partners such as Microsoft Accelerator, the firm continues to assist the early stage segment with information, advice and connections. Further, InnoVen partners withlarge corporates to identify promising companies and teams that could solve specific problem statements posed by the corporates, thereby creating opportunities for synergies and consolidation. InnoVenalso annually releases research reports on angel investment trends as well as outlook on topics ranging from businessand industry challenges, investor sentiment to policy and overall optimism.
Image : Ajay Hattangdi, Group COO and CEO India, InnoVen Capital