Alternative credit platform BlackSoil has successfully raised Rs 110 crores in the first close of its maiden secured AIF strategy BlackSoil India Credit Fund (BICF).
The funds were raised primarily from family offices & high net worth individuals despite tough market conditions especially considering the pandemic.
The fund will use the capital to a differentiated credit strategy comprising of the venture & structured debt, and target startups, companies across mid & growth stages.
The fund will look to raise overall ₹350 Crs and complete over 30 deals with an average cheque size of ₹10-20 Crs per investment. The AIF will comprise of companies in the same ecosystem as PE / VCs without the inherent risks associated with equity investments.
Asset & Venture-backed debt is now an integral part of funding rounds for startups across all stages and sectors. With the current challenging environment, BICFs fundraise also signals the increasing popularity of debt among startups, since it helps them avoid excessive dilution of equity, finance working capital for day-to-day business operations, and increases the runway before large equity fundraise.
The fund is attempting to solve the problem of access to finance for high-growth innovative companies backed by marquee institutional investors or established Indian founders, professionally managed SMEs (small & medium-sized enterprises), and lending to firms by offering customized debt.
While the fund is sector agnostic, it will specifically look at companies with a strong cash flow and those that are EBIDTA positive or reasonably on that trajectory. The importance of venture / structured debt was also highlighted in a black swan event like Covid.
Every company needs capital so debt availability outside the banking system has become an important source of financing for companies. Equity has a lot of connotations such as it is expensive & there are valuation mismatches. With the current pandemic, the availability of capital has been extremely challenging, and hence, it is evident there is a huge opportunity for debt players in the market.
“We are seeing a strong pipeline of startups across technology, healthcare, enterprise, and consumer segments with a need to finance their growing businesses, which will continue to grow in the coming years. We have a strong track record of catering to this segment and have already deployed ₹950 Crs over 4 years across 70+ transactions in companies namely: Oyo Rooms, Zetwerk, Spinny, Purplle, Koye Pharma, EarlySalary, LetsTransport, IndustryBuying, iNurture, etc,” said Ankur Bansal, Co-Founder of BlackSoil.