The Indian startup ecosystem saw a shift in funding trends for H1 2024. The debt investments increased by twofold to $576 million compared to last year. The Inc42 report mentioned a twofold increase in debt funding for this year’s first half from $285 million raised in the previous year. Meanwhile, equity investments took an 8 percent y-o-y hit in H1 2024. We are discussing Debt investments for Indian startups that increased to $576 million in the first half of this year.
We are discussing Debt investments for Indian startups that increased to $576 million in the first half of this year:
The startups choose the debt funding approach as it allows them to scale operations without requiring existing stakeholders to dilute their stake in the firm. The significant debt funding rounds for the first half of this year include a $50 million debt funding round raised by GPS renewable and the debt funding of $25 million by Bira91. Bira 91 is a craft beer manufacturing startup that secured 25 million USD in its debt funding round from Kirin Holdings and Tiger Pacific Capital in March. Ola Electric also had approval for Initial Public Offering from the Security Exchange Board of India. The company filed a draft red herring prospectus to raise Rs 5,500 crore through its public listing.
Equity investments declined 8 percent to $4.7 billion during the same period. The non-banking finance company Northern Arc secured the most debt funding between January and June. The startup raised $75 million via FMO in June and $80 million from IFC in April. Northern Arc led the overall debt funding for the first half of this year. The total funding amount secured by the startup was around $77.4 million through FMO across three deals.
Debt funding before listing is the standard approach in IPO-bound companies. Many startups, including Ola Electrics, Mobikwik, and Bluestone, raised debt investments in the first half 2024. The venture debt firms were the most active investors, and the Venture debt company Stride Ventures led the list by investing in around 46 startups, including Ather Energy, LendingKart, Zyod, and Ola Electrics. Indian startups had a 1.8 percent decrease this year and secured around $5.3 billion in the first half. However, deals increased by 7 percent to 504 in the same duration.
Conclusion
Indian startup ecosystem saw a two-times increase in debt investments for the first half of this year compared to H1 2023. This year’s debt funding rounds increased; however, the equity investments decreased by 8 percent to 4.7 billion USD. Many startups selected this approach as the debt investments remove the pressure on existing stakeholders and allow the startups to scale their operations.
The primary debt funding round for this year’s first half was a $25 million round from Bira 91 led by Kirin Holdings. GPS Renewable secured $50 million in its debt funding round. The nonbanking lending company Northern Arc secured the most extensive debt amount, buoyed by its $77.4 million raised across three deals via FMO. Venture debt company Stride Ventures was the most active investor, investing in around 46 startups.
