India’s Trifecta Capital closes oversubscribed Venture Debt Fund III at ₹1,777 crore

Noted Indian venture debt firm Trifecta Capital, has announced the final close of its third and latest venture debt fund. Called ‘Trifecta Venture Debt Fund III’, it was oversubscribed, shooting past the initial target of ₹1500 crore to finally reach a total of ₹1777 crore (which amounts to nearly $213Mn in US$ terms).

Since its inception nine years ago by founders Rahul Khanna and Nilesh Kothari, Trifecta Capital has played a pivotal role in India’s startup landscape. The firm specializes in providing customized financing solutions to startups across various sectors, including B2B, consumer services, consumer brands, e-commerce, mobility, edtech, agritech, fintech, cleantech, software, and healthcare. Unlike traditional debt financing, venture debt is tailored to the unique needs of startups, allowing them to access capital without diluting equity.

The closing of Trifecta Venture Debt Fund III, with a total corpus of ₹1,777 crore, marks a remarkable achievement for the firm. This development also comes nearly two years of an initial closing of the third fund – that had taken place in November 2021. Going forward, the third fund will have an investible corpus of up to ₹4,440 crore, along with a provision for capital recycling.

“The credit quality of the portfolio of Trifecta Venture Debt Fund-III is exemplary, with 40% of the funds’ portfolio companies having already raised follow-on equity financing within just 21 months since the first investment, despite a broader funding slowdown. Furthermore, the median revenue growth rates in investee companies are very healthy at 60%-plus annually,” Khanna said. “With Trifecta Venture Debt Fund III, we have a pipeline of near-term opportunities worth more than INR 800 Cr across a curated cohort of startups. We expect to cross INR 6,000 Cr of cumulative debt capital invested during the current financial year itself,” he added.

Trifecta itself has already invested millions into the Indian startup ecosystem, including capital raised from its third fund. So far, with a commitment of ₹1,500 crore, the firm has already extended support to more than 50 startups. Notable beneficiaries include Zepto, The Good Glamm Group, Kissht, Rebel Foods, Cashfree Payments, Bira, Infra.Market, Udaan, Arzooo, Globalbees, and Eatfit, among others.

One of the compelling aspects of Trifecta Capital’s venture debt model is its focus on the growth stage of startups. By providing capital during the Series B stage and beyond, the firm empowers these companies to expand rapidly and achieve their growth objectives. In fact, Trifecta Capital has – to date – raised ₹5000 crore across three venture debt funds and one growth equity fund. Today, its portfolio has expanded to include the likes of 21 unicorns and more than 12 soonicorns, including well-known names like Big Basket, Pharmeasy, Cars24, Vedantu, ShareChat, Dailyhunt, and UrbanCompany, among others.

With the final close of its third venture debt fund, Trifecta Capital is poised for further expansion and impact. The firm anticipates the launch of its fourth venture debt fund in early 2024, reflecting its commitment to being the preferred financial partner for India’s new economy businesses. Additionally, a second growth equity fund is on the horizon, building on the success of Trifecta Leaders Fund-I, which raised ₹1,500 crore to drive investments in growth-stage startups.