Hey Startups? Here's A $100 Mn Hybrid Fund for Your Innovative Idea

Indian-based investment firm Anthill Ventures is set to introduce a new USD 100 million hybrid fund, targeting the burgeoning startup sector in India. This development comes in the midst of heightened investor enthusiasm for opportunities in the Indian market amidst slowdown in some of the neighbouring economies.

The company plans to raise USD 100 million for a cross private credit and equity fund to finance Indian startups geared toward consumer experiences, wellness, and entertainment,

What is a Hybrid Fund?

A hybrid private equity fund combines elements of both traditional private equity and other investment strategies, such as debt financing or public equity investments. These funds typically invest in a diverse range of assets, including private companies, distressed debt, real estate, and public equities. The hybrid structure allows investors to access a broader array of investment opportunities while potentially mitigating risk through diversification. Additionally, hybrid private equity funds may offer investors varying levels of liquidity, depending on the underlying assets and fund structure.

Hybrid funds have become more popular in recent years, driven by intense competition among both investors and asset managers. This heightened competition has prompted asset managers to explore avenues for enhancing diversification and introducing flexible liquidity terms in their offerings.

What Kind of Startups Will Anthill Hybrid Fund Support?

Anthill Ventures, led by founder and CEO Prasad Vanga, aims to raise a substantial USD 100 million for this hybrid fund. Vanga disclosed that the fund will prioritize investments in Indian startups specialising in consumer experiences, wellness, and entertainment sectors.

The fund’s portfolio will be a mix of technology startups and consumer brands, all valued in US dollars. Vanga outlined that initial financing for the brands is likely to take the form of debt, with the potential for conversion into equity stakes as these companies grow and expand their operations.

Private Credit Market Dynamics

The Indian startup ecosystem has rapidly grown over the last decade and established itself as one of the key startup hubs globally.India has emerged as the third largest startup ecosystem in the world after the US and China.

According to Morgan Stanley, the size of the private credit market at the start of 2023 was approximately $1.4 trillion, compared to $875 billion in 2020, and is estimated to grow to USD 2.3 trillion by 2027.

The global private credit has emerged as a compelling alternative for investors seeking higher returns compared to traditional lending avenues. India, in particular, has garnered significant attention within this space.

How Will Anthill Address Financing Challenges for Startups?

Prasad Vanga highlighted the critical role this fund will play in addressing financing challenges faced by startups, particularly in accessing debt from traditional banking channels.

Vanga stated, “Securing debt in India is tough as banks typically want security and don’t accept startup company valuations. So that’s a huge opportunity for us."

What’s The Track Record of Anthill?

Anthill Ventures boasts a track record of successful investments, as evidenced by Vanga's backing of companies like Tynker, a coding platform acquired by the prominent online education giant Byju's in 2021.

There is a growing investor optimism towards the Indian startup ecosystem. Against the backdrop of a slowing Chinese economy, investors are increasingly turning their attention to India, viewed as a promising hub for innovation and growth.

Anthill Ventures’ strategic move to introduce a hybrid fund dedicated to Indian startups reflects both the opportunities and challenges within the Indian investment landscape. With investor interest on the rise and a conducive market environment, the fund is poised to make significant contributions to the growth and development of the Indian startup ecosystem.

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