Venture debt: a catalyst for Indian entrepreneurship. Issue 3 (2nd July 2020)

• Record Type: Journal Article
• Authors: Veena Iyer, S.
• Is Part Of: Venture capital. Volume 22:Issue 3(2020)
• Page Start: 215
• Page End: 238
• Publication Date: 2020-07-02
• Subjects: Venture debt -- venture lending -- start-up -- entrepreneurial finance -- entrepreneurial debt -- venture capital; Venture capital -- Periodicals; Entrepreneurship -- Periodicals; 332.041
• DOI: 10.1080/13691066.2020.1801141
• Languages: English
• ISSNs: 1369-1066

Abstract

ABSTRACT: Venture debt (VD) has emerged as a preferred funding option for start-ups that do not tick the boxes for traditional debt. Though VD emerged in the USA in the 1970s, academic interest on the topic is recent, primarily in the 2010s decade. VD is a recent phenomenon in India, but has the potential to be a growth catalyst for the Indian entrepreneurial ecosystem. This article reviews the extant academic literature on VD to provide a clear description of the scope, features, economics and practice of VD that can be a reference point for future academic work and practitioner reference. It also provides the first-ever description and analysis of the Indian VD landscape thus, comparing the Indian VD market with those in developed economies. Descriptive and comparative statistics from deal data and themes and insights from media articles are triangulated with existing literature to conclude that VD is evolving in India on established lines but with differences that account for India's unique cultural, economic and political characteristics. Venture lenders exhibit boldness and experimentation by leveraging the lessons available to a later-mover. There is immense scope for growth of VD in the Indian economy. Policy interventions being made and required to iron out challenges and support and enable such growth are discussed.