Axis Bank’s New Economy and Financial Sponsors Group (NEGFS), a specialised business vertical of Axis Bank has supported nearly 700 startups since its inception.

It holds a 40 percent market share among Series A and beyond-funded startups and provides banking services to 67 percent of India’s unicorns.

Launched in 2018, NEGFS is dedicated to addressing the unique banking needs of startups and their investors.

In a conversation with the media, Rajiv Anand, Deputy Managing Director of Axis Bank, and Sanjiv Bhatia, President & Head of the New Economy Group, Financial Sponsors, and Multinationals Coverage, shared that their investments in startups aim to support various banking needs, including working capital loans, transaction banking, employee banking, and forex services.

Q

How do you choose startups to lend to?

We primarily assess the startup’s runway, which includes how much equity they have raised and how much money they are losing each month, helping us determine how long they can sustain their operations before needing another equity raise. From a lending perspective, we do not take on equity risk. Additionally, we follow RBI guidelines that allow us to lend against debtors, inventory, and capital expenditures. We ensure that the startup has sufficient cash on its balance sheet to cover its losses for at least 12 months. Once these criteria are met, we lend in a measured way, using self-liquidating structures. The startup collects payments from its customers, which gradually pays down our loan, and then they can borrow again as needed. This cycle continues as long as the startup remains financially stable.

Q

What is the book value across lending and deposits from startups?

Our deposit book from the startup community stands at ₹25,000 crores, which includes a mix of current accounts, savings accounts, and term deposits. As for lending, our book to the startup community is approximately ₹2,000 crores.

Q

What sectors are you investing in?

We are largely sector-agnostic, working across a wide range of industries such as agri-tech, e-commerce, SaaS, D2C, and edtech, among others. For each sector, we tailor our solutions to meet their specific needs, ensuring they align with the unique requirements of their businesses.

Q

How are you navigating the ongoing funding winter, and what trends are you observing in this space?

The funding winter has been evident for the past 6 to 12 months, particularly due to challenges in the U.S. private equity (PE) and venture capital (VC) markets, where investors have struggled to secure exits. Their model typically relies on investing, generating returns, exiting, and reinvesting, but this cycle has slowed. Consequently, overseas funding into India has been reduced to some extent. However, India has demonstrated resilience during this period. Over the past year, the Indian market has shown a growing ability to generate exits for PE and VC investors, with significant block deals and IPOs enabling liquidity. The maturity of Indian markets and the increasing acceptance of new economy companies have also contributed to this trend, providing liquidity not only to investors but also to startups. Additionally, Indian family offices have emerged as significant contributors to startup funding, offering another source of liquidity. The rise of Indian venture capital funds, registered with SEBI, has also been instrumental. These funds, often backed by domestic savings and family offices, are playing a critical role in sustaining the startup ecosystem during this phase.