Trifecta Capital, India’s pioneering venture debt firm, has marked a significant milestone with the first close of its fourth and largest venture debt fund, targeting ₹2,000 crore with an additional greenshoe option of ₹500 crore. The announcement signals growing confidence in India’s startup ecosystem, particularly in emerging tech hubs like Tamil Nadu, where the firm sees substantial growth opportunities.
While the exact amount remains undisclosed, the firm has secured commitments for approximately half of the targeted fund size, demonstrating strong investor interest despite current market conditions. The final close is expected by the end of 2024, positioning Trifecta to expand its presence in South India’s burgeoning startup landscape.
“The startup ecosystem has evolved significantly since our inception, and we’ve seen different sectors take prominence across our various funds,” explains Rahul Khanna, cofounder and managing partner of Trifecta Capital. “We maintain a disciplined approach to sector allocation, ensuring no single sector exceeds 15% of our fund deployment, while focusing on areas showing clear signs of maturity and growth potential.”
The new fund represents a strategic expansion of Trifecta’s investment thesis, with plans to support more than 100 startups through ticket sizes ranging from ₹25 crore to ₹30 crore. This approach aligns with their previous fund’s strategy, which saw investments between ₹23 crore and ₹35 crore per company. The firm is targeting diverse sectors including fintech, electric vehicles, consumer services, logistics, B2B services, and notably, renewable energy and sustainability – sectors where Tamil Nadu has demonstrated particular strength.
For Tamil Nadu’s startup ecosystem, Trifecta’s latest fund brings significant opportunities. The state, known for its strong manufacturing base and growing technology sector, stands to benefit from increased access to venture debt financing. This is particularly relevant for startups in Chennai’s SaaS ecosystem and the state’s emerging EV and renewable energy clusters.
“With this ₹2,000 crore fund, we effectively have a ₹5,000 crore investment corpus, as we historically recycle our capital up to two and a half times,” Khanna noted, highlighting the fund’s potential impact on the startup ecosystem. This recycling strategy allows Trifecta to support more companies throughout their growth journey, providing crucial non-dilutive financing options for scaling operations. The fund has garnered substantial backing from insurance companies, leading family offices, and corporate treasuries, reflecting institutional investors’ growing confidence in venture debt as an asset class. This broad-based support follows the success of Trifecta’s third fund, which closed at ₹1,777 crore in September 2023, exceeding its initial target of ₹1,500 crore.
Since its founding in 2014 by Khanna and Nilesh Kothari, Trifecta has invested ₹6,500 crore across 180 startups through its three previous funds. The firm’s portfolio includes over 50 unicorns and soonicorns, with successful exits from companies like ixigo, BlackBuck, and MobiKwik, which have gone public.
For Tamil Nadu-based startups, the fund’s launch comes at an opportune time as the state strengthens its position as a key startup hub in India. The availability of venture debt funding can help local startups optimize their capital structure while maintaining growth momentum, particularly in capital-intensive sectors like manufacturing, EVs, and renewable energy.
