New Delhi, Jun 10 (PTI) Indian Angel Network (IAN) on Wednesday said it has partnered Indifi Technologies to launch a growth stage debt fund to help IAN portfolio companies get access to working capital.
The fund aims to provide growth debt capital to support start-ups to pull through the slowing economy and continue their business operations, according to a statement.
The announcement comes at a time when businesses, especially start-ups, are facing liquidity crunch due to the coronavirus pandemic that forced the entire country to be under lockdown for over two months.
“Several start-ups with a sound business model are struggling to keep up with their working capital needs due to a sudden impact on their business induced by COVID-19,” IAN co-founder Padmaja Ruparel said.
This is the time to handhold companies and help them in every possible way that does not halt operations and ensures business continuity, she added.
According to industry body Nasscom, 70 per cent start-ups have cash reserves to last less than three months and 40 per cent start-ups have either temporarily halted operations or are in the process of shutting down.
“The idea behind this partnership is to create support system aimed at accelerating the growth trajectory of new-age start-ups looking to adapt and excel during these difficult times,” Indifi Technologies CEO and MD Alok Mittal said.
He added that the partnership will help IAN portfolio companies seamlessly navigate the highly competitive and continuously evolving business landscape.
Through this fund, start-ups will be able to avail debt in the range of Rs 10 lakh to Rs 2 crore based on the revenue pattern of the business.
This will benefit start-ups with no equity dilution or other equity-related rights for the lender.
Depending on product structure and the growth periodicity of business, loan repayment duration will range between 18 months and 36 months, the statement said.
The debt fund will provide support to start-ups in the business of software-as-a-service, direct-to-consumer online brands, enterprise services, edutech, digital media, advertising-driven businesses, and leasing businesses.
Special incentives for women-led start-ups will be considered under the initiative, the statement said.