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The B2B sector of India has potential to replace Fintech as the most attractive sector for venture debt in 2023, closely followed by Consumer and Electric Vehicles (EV) according to findings of a survey by Stride Venture
“The survey accentuates the investor sentiments of venture capitalists (VCs) and start-up founders with respect to various factors driving the venture debt ecosystem. The survey was conducted with 150 Start-up Founders and Venture Capital firms (VCs),” Stride Ventures said.
The survey found that in 2023, 82% of founders said they will strive for profitability and prioritise scaling their start-ups, while 79% of VCs expressed a focus on profitability, and 21% want to focus on growth. This is in contrast to 2022 when 55% of VCs and 68% of founders focused on growth rather than profitability.
The survey also revealed that 71% of founders of early-stage companies plan to raise venture debt in 2023, compared to 50% of late-stage founders and 20% of growth-stage founders.
Additionally, 74% of VCs surveyed would recommend their portfolio companies to take on venture debt in 2023. In 2022, 100% of growth-stage founders were certain of raising venture debt, compared to 86% of early-stage founders and 67% of late-stage founders.
The survey results also highlighted that 62% of founders and 44% of VCs consider “engaging with bank limits” as the most important value-added service offered by a venture debt fund, with “advisory on corporate financial services” being the second most preferred service for 28% of founders and 33% of VCs.
This is a change from 2022, where advisory on corporate financial services was considered the most important value-added service, followed by “engaging with bank limits”.
Finally, the survey indicated that Agritech, Healthtech, and SaaS sectors are receiving fewer venture debt prospects according to founders and VCs. These findings suggest that founders and VCs in India are prioritizing profitability and seeking venture debt as a means of achieving growth, while also valuing value-added services from venture debt funds.
Ishpreet Singh Gandhi, Founder and Managing Partner, Stride Ventures, said, “Venture Debt has become one of the key growth enablers for Indian start-ups. The rising awareness of this asset class and positive investor outlook has enabled Venture debt to more effectively showcase its non-dilutive characteristics and capacity to unlock growth.
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