Trifecta Capital, a venture debt firm, has launched its fourth fund, targeting a raise of up to Rs 2,000 crore (approximately $240 million), including a greenshoe option of Rs 500 crore. The firm has previously supported notable companies such as Zepto, Meesho, BlueStone, and Urban Company, deploying Rs 6,000 crore from its three prior funds, including recycled capital.
Trifecta Capital plans to distribute the new funds across various sectors while avoiding particularly high-risk areas like cryptocurrencies, gaming, and peer-to-peer lending. In September of the previous year, the firm concluded its third fund at Rs 1,777 crore, surpassing its initial target of Rs 1,500 crore. Earlier funds had raised Rs 500 crore and Rs 1,024 crore, respectively. The firm’s investment strategy has remained consistent, though the specific sectors of interest have evolved over time, with significant investments in companies like BigBasket and Zepto.
Since its founding in 2015 by Khanna and Nilesh Kothari, Trifecta Capital has invested in over 30 unicorns—startups with valuations exceeding a billion dollars—and numerous companies nearing unicorn status. The firm anticipates attracting a diverse range of investors, including global financial institutions, domestic conglomerates, banks, insurance firms, and development financial institutions. Despite a challenging period for venture investment, the firm’s total write-offs have been minimal, at 0.6% of its investments. This success is attributed to a cautious strategy that limits exposure to any single sector or sponsor, combined with a robust underwriting process and risk management framework.
The Indian startup and private investment landscape has experienced a slowdown over the past two years, following the low-interest rate boom of 2020 and 2021. However, venture debt has remained resilient, with around 190 startups in India raising a total of $1.2 billion in venture debt in 2023, a 50% increase from the previous year. Globally, venture debt reached approximately $60-65 billion in 2023, according to Stride Ventures.
In 2023, Trifecta Capital intentionally slowed its pace of fund deployment compared to 2022, deploying 20% less. However, the pace picked up in 2024, with the firm expecting to deploy Rs 1,400-1,500 crore this year. Despite the downturn, the firm has avoided significant credit losses, choosing to accept a slightly lower internal rate of return (IRR) rather than risking capital. This cautious approach has allowed Trifecta to navigate the funding winter without major setbacks, even as several venture-funded startups, such as Bluelearn, Koo, FrontRow, and Zest Money, ceased operations.
Trifecta Capital is one of several venture debt players in India, alongside Stride Ventures, Alteria Capital, and InnoVen Capital. In recent months, these firms have also closed significant funding rounds, indicating a healthy and competitive venture debt market in the country.
