Trifecta Capital Raises Fund Three

Trifecta Capital has announced the launch of its third venture debt fund, Trifecta Venture Debt Fund – III. The Fund, with a target corpus of INR 1000 crores (the US $ 133 million) and a greenshoe option of INR 500 crores (US $ 67 million), will be the largest in the series of Venture Debt Funds managed by the firm. The Fund aims to serve the rapidly growing financing opportunities for Indian start-ups. This sunrise sector has seen 24 new entrants to the Unicorn Club in 2021 and has attracted the US $ 26 billion in equity financing in the first eight months of 2021.

The launch of Trifecta Venture Debt Fund – III is testimony to the deep confidence that investors have placed in the Trifecta Capital team, on the basis of its robust investment track record across both its prior funds as well as the thought leadership demonstrated in creating and growing this alternative asset class. Earlier this year, the firm had announced the final close and oversubscription of its Venture Debt Fund – II, as well as the first close of its late-stage equity offering, Trifecta Leaders Fund – I.

Trifecta Capital pioneered the nascent asset class of venture debt funds in 2015, by financing early growth and growth stage start-ups via the country’s first venture-debt fund. This fund is now in its 7th year and has delivered consistent returns on a quarterly basis through some very challenging years for the Indian economy. Trifecta Venture Debt Fund – I has returned 100% of the corpus to its investors and is now harvesting the capital gains from the equity options that it holds across most portfolio companies. The Venture Debt fund model created by the Firm has now evolved into the standard for start-up venture debt funding and has been widely adopted across the industry, which itself has grown multifold as the ecosystem becomes more aware of alternate financing options.

Trifecta Capital has built strong systems and processes, underwriting frameworks and grading methodologies that has allowed it to make 140 investments over the last 6 years. Trifecta Capital’s Venture Debt Funds have invested approximately INR 2200 crores (US $ 293 million) in 85+ start-ups. The Trifecta Venture Debt Fund’s portfolio now has 11 Unicorns and more than 15 Soonicorns, with marquee businesses including Big Basket, Pharmeasy, Cars24, Vedantu, Infra.Market, ShareChat, Dailyhunt, UrbanCompany, CarDekho, Blackbuck, Ninjacart, NoBroker, Kreditbee, Dehaat, Turtlemint, Servify, Livspace and BharatPe amongst several others. The portfolio is cumulatively valued at US $ 33 Billion.

Backed by its distinctive track record, Trifecta Capital is witnessing strong and continued interest in Venture Debt Fund – III from investors in its prior funds which include Banks, Insurance companies, Development Financial Institutions, Corporate Treasuries and Endowments as well as several of India’s largest Family Offices. Buoyed by this investor support, the firm is also forging new partnerships with some large global financial conglomerates for capital contributions into this Fund.

Across its three verticals, Trifecta Capital has built a strong and diverse team of investment professionals with a depth of experience in building and investing in start-ups. It will continue its focus on prudently selecting market leaders and category creators early in their trajectory for the planned investments from Trifecta Venture Debt Fund – III. It will offer customised solutions woven around growth financing, with creative mechanisms of risk sharing, working capital financing for inventory and receivables, bespoke capital structured to fund acquisitions, as well as blended financing structures along with participation from banks and NBFCs.

The firm additionally aims to utilize the capital pool to continue backing portfolio companies farther into their growth journey, through multiple follow-on investments and the ability to underwrite larger investments. Focus sectors where the firm plans to enhance participation include emerging sectors with high growth prospects such as SaaS (Software as a Service), D2C (Direct-to-consumer), B2B commerce, Fintech, E-commerce Sellers, etc. Trifecta Capital aims to complete the first close in CY 2021 and aims to begin deployment from the new fund simultaneously with the first close, with a healthy pipeline of credit opportunities that have already been identified.

Equipped with the newly launched Trifecta Venture Debt Fund-III, a customized technology platform offering Financial Solutions advisory to start-ups and a Late-Stage Equity fund, Trifecta Capital aims to consolidate its position as an innovator and financial partner of choice for the rapidly growing start-up ecosystem. Rahul Khanna, Managing Partner said, “As the pioneering provider of credit to the new economy, we take immense pride in the asset class that we have helped build and institutionalize over the last six years. With this third venture debt fund, we will strengthen our existing investor relationships and selectively add new investors who can add value to our portfolio companies. We aim to further enhance our track record of delivering consistent returns every quarter as well as best-in-class venture debt fund returns to our investors, as we help them participate in some of the most exciting new businesses in India.”

Nilesh Kothari, Managing Partner added, “In our two existing venture debt funds, we have been extremely selective on the companies that we have chosen to partner with, and creative in how we structure solutions to serve them. The quality of our portfolio is a testament to this approach, as we invested in less than 1 out of 10 opportunities that we evaluated, and now have a portfolio with more than 20 unicorns and soonicorns. In this new fund, we will continue to select the very best, and further innovate on the right credit products for them, as we are strong believers in the potential of these businesses to scale and contribute to nation-building.”