Varanium Capital launches $30.5m fund to back 100 Indian startups

From left: Varanium Capital’s KS Sridhar, TS AnantaKrishnan, Aparajit Bhandarkar, Nawal Bachhuka, and Paul Abraham / Photo credit: Varanium Capital

Varanium Capital, an India-based asset management firm, has announced the first close of its first venture debt fund worth 2.5 billion rupees (US$30.5 million), with a greenshoe option of US$6.1 million.

The fund aims to use a combination of revenue-based financing and traditional venture debt to back around 100 startups in India. The average size for revenue-linked small ticket loans ranges between US$150,000 and US$350,000. Meanwhile, the scope for traditional venture debt is from US$1 million to US$1.5 million.

“Due to the funding winter and low equity dilution, there is a growing acceptance of venture debt and newer modes of financing like revenue-based funding. The opportunity for venture debt and revenue-based funding as a mode of financing is set to grow in the coming years,” a Varanium spokesperson told Tech in Asia.

The venture debt fund will primarily back startups operating in sectors like direct to consumer, software as a service, B2B commerce, and fintech. Varanium will also offer startups access to its extensive network and mentorship programs.

The new fund’s approach to selecting startups focuses on factors such as positive unit economics, recurring revenue from multiple sources, and a seasoned founding team.

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It has secured commitments from family offices, ultra high-net-worth individuals, and entrepreneurs, including former CEOs and chief experience officers of banks. While Varanium didn’t name the fund’s investors, it has confirmed to Tech in Asia  the participation of a US-based anchor.

In addition to the new fund, Varanium Capital has established a fintech-focused venture equity fund and invested in 12 startups to date, including Easebuzz, Riskcovry, Finvu, and Homeville.

Currency converted from Indian rupee to US dollar: US$1 = 82 rupees.