Global investment institution Lighthouse Canton has announced the first close of its venture debt fund, a Category – II AIF, at INR 155.4 crores. The Fund, which has a capacity of INR 550 crores and a Greenshoe option of additional INR 550 crores, is part of Lighthouse Canton’s regional venture debt strategy. The Fund has seen participation from onshore and offshore institutions and family offices.
The Fund shall provide debt capital to technology-enabled companies which are part of the Indian startup ecosystem. For companies with sound business models and viable unit economics, venture debt is an alternative source of growth funding, which is gaining traction amongst Indian companies now.
In recent years, India’s startup ecosystem has witnessed a boom, attracting 5% of all venture capital deal flows globally (Source: State of Venture 2022 Report, CBInsights) last year with over US$20bn invested. At the end of 2022, there were 1,205 unicorns globally, with nearly 10% hailing from India. Today the Indian startup ecosystem is the third largest in the world, only behind the United States of America and China, and is posed to grow further.
“As the pace of venture capital activity continues to grow, it is logical that we would see a rise in venture debt demand,” said Lighthouse Canton’s Global Head of Asset Management, Sanket Sinha. “In more mature venture ecosystems such as the US and Europe, venture debt has risen to 15-20% of the total VC funding, whereas this proportion is less than 2% in India. Given the growth of venture ecosystem in India, we see tremendous opportunity for venture debt, and we expect the size of this market to grow 3-4x in the next five years.”
“Given that our venture debt strategy is regional, we can also support a startup with aspirations to expand out of the domestic market. Our presence in other markets uniquely positions us to partner with companies with international expansion plans and help them with their financing needs.”, explains Lighthouse Canton’s Director for venture debt, Ankit Agrawal. “Our investors and partners appreciate the value we bring to the ecosystem, and we are witnessing healthy demand for this asset class”. LC Venture Debt fund expects to deploy the capital in the next two years across 35-40 companies.
Lighthouse Canton has been actively building its capabilities in the venture investment space, and this is the second Fund launched this year focused on the Indian startup ecosystem. Earlier this year, Lighthouse Canton partnered with Nueva Capital to launch its maiden venture capital fund, LC Nueva, focused on pre-series A and series A companies in India. The Fund was oversubscribed and successfully applied for an additional INR 50 crores with the regulator.
Headquartered in Singapore, Lighthouse Canton is a global investment institution with wealth and asset management capabilities. The firm has over 100 experienced professionals in Singapore, Dubai, and India, and it oversees over US$ 3 billion worth of assets under management and advisory (as of 30th Sep 2022). Lighthouse Canton has a dedicated strategy to cater to the needs of startups and their founders.
Lighthouse Canton’s Founders’ Ecosystem, as it is known, is the firm’s commitment to helping startups and their founders enhance performance and plan for their personal and business legacies at various stages in their life cycles. The initiative provides Founders and startups added value through other venture investments, and business solutions as well as personal wealth management services These solutions range from funding solutions for companies across the capital structure to pre- and post-monetization funding needs of the founder. The firm also works closely with the founders and senior management on business structuring and personal wealth solutions.
