Founded in 2019, Stride Ventures’ portfolio of 150-plus companies today boasts more than 12 unicorns. The venture debt firm offers loans to startups in Series A and above rounds, alongside institutional backing. This includes equity warrants in addition to the debt component, with an interest of 12-15 per cent on a repayment period of 2-3 years. Principal protection is paramount, says Apoorva Sharma, Managing Partner, Stride Ventures. Edited excerpts from an interview:
How much funding have you raised to date?
The first fund of $50 million was raised in 2019 and has been fully returned to investors. The second fund, raised in 2021 with a $200 million corpus, is fully deployed. We have a four-year fund, but we lend for 18 to 24 months. The principal is redeployed during the four years, post which we have to start returning the money to investors. The second fund is in the churn recycle phase. We start returning capital in July next year. The third fund is $165 million, and the first round of deployment is nearly over.
What is your investment thesis?
It’s essentially to extend credit to companies that are backed by venture capital or private equity funds. A lot of these companies are loss-making, so they can’t access working capital lines or term loans from banks or NBFCs [non-banking financial companies] but they need access to debt, otherwise they will start filling their needs through equity, which results in unnecessary dilution.
In venture debt as an asset class, we are helping companies bridge this gap but, at the same time, we have to make sure that the risk is minimal.
What is your average cheque size?
It is around $4 million, that is ₹25-30 crore.
Which sectors are you betting on?
Stride maintains a sector-agnostic approach while focusing more on some sectors. One important sector is consumer, which includes jewellery, beauty and personal care, furniture, food, and beverage. Next is financial services and fintech. The third, in terms of quantum of deployment, is clean tech.
How many exits have you had so far?
In a debt fund we have a defined repayment schedule, and the company keeps running down the debt. To date, a ballpark number would be 70 companies, which would have completely returned the debt.