Alternative credit platform Blacksoil, which has backed Indian unicorns such as OYO and Spinny, on Tuesday said it recently raised about $40 million in debt through various financial instruments including non-convertible debentures (NCDs) and term loans from banks.
Blacksoil co-founder Ankur Bansal said the funds raised are primarily at the firm’s NBFC level, and the investor base includes high-net-worth individuals (HNIs), ultra HNIs, family offices, and corporates.
Blacksoil’s portfolio includes unicorns such as Upstox, Slice, MobiKwik, Udaan, Infra.Market, Zetwerk, and Purplle.
As the access to equity slows down during the funding winter and valuation multiples sober up, Indian startups are increasingly turning to alternate forms of funding to meet their working capital needs.
Debt infusion into Indian startups stood at $206.2 million in 2022. While this was 25% below the peak of $277.3 million seen in 2021, it more than doubled from $91.7 million in 2020, according to data from Tracxn.
According to Bansal, the ‘funding winter’ has opened up opportunities for alternative credit as they provide the necessary runway through working capital solutions, acquisition financing, and other short-term funding requirements without impacting the overall cap table and underlying valuations of startups. To meet the growing demand for venture debt, many firms like BlackSoil have launched new vehicles in the past few months.
In Q2FY24, Blacksoil claims to have deployed $44 million across 11 new deals, adding that around 65% of its current portfolio is EBITDA-positive.
In Q2 FY24, financial institutions accounted for 27% of their total investments, followed by SaaS/deep tech/IoT at 18%, healthcare at 14%, and consumer Internet at 13%. Notable additions to the portfolio in this period included Cellecor, Freight Tiger, Stashfin, Credright, Svasti MFI, and Kenko, Blacksoil said.
Blacksoil has three core businesses, namely credit to growth companies/emerging corporates, credit to FIs, and NBFCs, and supply-chain financing.
“We intend to maintain the returns we have delivered in the past, which is north of 15% IRR,” Bansal said.
In the first half of the financial year 2024, three of BlackSoil’s existing portfolio companies, namely Ideaforge, Yatra, and Cellecor Gadgets, made their debut on public exchanges.
Over the next six months, we do not anticipate any IPOs from our portfolio companies, Bansal said, adding that the company foresees such IPOs may still be some time away.