Venture debt firm Trifecta Capital has announced the first close of its fourth fund after raising nearly half of the total targeted corpus of Rs 2,000 crore, which includes a greenshoe option of Rs 500 crore.
The first close serves as a significant milestone for venture capital and venture debt firms, allowing them to start deploying capital from the fund. The fund plans to invest its new capital pool in over 100 companies during its term.
“We will continue to raise for the next six to nine months and hopefully do a final close by the tail end of the year, around September-October,” Rahul Khanna, managing partner at Trifecta Capital, said in an interaction with Fe.
Trifecta began raising its fourth fund in August last year. Before that, the firm closed its third debt fund at Rs 1,777 crore in 2023, and till date, it has raised Rs 5,300 crore across four venture debt funds and one growth equity fund. Trifecta has invested in startups such as Zepto, Meesho, BigBasket, BlueStone, Country Delight, Rebel Foods, and more.
Venture debt is a type of loan offered to Series A-and-above startups with institutional backing, and includes equity warrants in addition to the debt component, with a repayment period of two-three years. These equity kickers are, typically, about 10% of the debt quantum and usually translate to less than 1% ownership in the firm on a fully diluted basis.
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For limited partners (LPs) of a venture debt fund, returns usually range between 15-20%, while venture capital funds offer returns north of 25%. Venture debt is typically only available to firms with institutional backing, so much of the uptick in venture debt deals hinges on the recovery in venture capital investments.
In 2024, venture debt investments were estimated to be around $900 million, nearly the same as the year before, while venture capital funding in tech companies improved marginally by about 6%.
Trifecta raised capital for its fourth fund from insurance companies, large family offices, corporate treasuries, and offshore banks, among others. “The challenge for us is that the domestic institutional sources of capital are still quite limited,” Khanna said, adding that globally,
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