Venture Debt Funding Propels Fintech, EV startups

New Delhi: The venture debt market in India is steadily growing, mirroring the early days of venture capital, particularly in the emerging startup sectors such as fintech and electric vehicles (EVs), a report showed on Thursday.

Indian founders are increasingly turning to venture debt to bridge funding gaps and avoid excessive equity dilution, according to the report by global investment institution Lighthouse Canton.

This shift has been primarily driven by the scarcity of equity funding in the market and the desire to preserve ownership while accessing the capital necessary for growth.

The report indicated that the top reason founders prefer venture debt over traditional debt and equity is its less dilutive nature (40 per cent), with repayment schedule flexibility also being a significant factor (30 per cent).

This preference shows a growing recognition of the strategic advantages venture debt provides, especially in capital-intensive and rapidly evolving industries.“India’s startup ecosystem holds immense potential, and the growth of venture debt funding is playing a pivotal role in driving its development,” said Sanket Sinha, Managing Director, Global Head of Asset Management at Lighthouse Canton.