Alternative credit platform Blacksoil has successfully raised approximately $40 million in debt capital using various financial instruments, including non-convertible debentures (NCDs) and term loans from banks. The majority of the funds were raised at the firm’s NBFC (Non-Banking Financial Company) level and attracted a diverse investor base, including high-net-worth individuals (HNIs), ultra HNIs, family offices, and corporates.
Blacksoil has an impressive portfolio that includes Indian unicorns such as OYO, Spinny, Upstox, Slice, MobiKwik, Udaan, Infra.Market, Zetwerk, and Purplle.
As access to equity funding becomes more challenging during what is commonly referred to as the “funding winter,” Indian startups are increasingly seeking alternative funding sources to meet their working capital requirements. In 2022, debt investments in Indian startups totaled $206.2 million, a notable increase from $91.7 million in 2020, although slightly below the peak of $277.3 million seen in 2021, according to data from Tracxn.
Blacksoil co-founder Ankur Bansal emphasized that this funding winter has created opportunities for alternative credit providers, as they offer valuable support through working capital solutions, acquisition financing, and other short-term funding solutions without affecting the overall capital structure and valuations of startups. To address the growing demand for venture debt, several firms, including Blacksoil, have recently introduced new financing options.
During Q2FY24, Blacksoil reported deploying $44 million across 11 new deals. The company noted that approximately 65% of its current portfolio consists of EBITDA-positive companies. Financial institutions accounted for 27% of total investments in Q2 FY24, followed by SaaS (Software as a Service), deep tech, IoT (Internet of Things) at 18%, healthcare at 14%, and consumer Internet at 13%. Notable additions to the portfolio during this period included Cellecor, Freight Tiger, Stashfin, Credright, Svasti MFI, and Kenko.
Blacksoil operates three core business segments: providing credit to growth companies and emerging corporates, extending credit to financial institutions (FIs) and NBFCs (Non-Banking Financial Companies), and supply-chain financing.
Ankur Bansal expressed the firm’s intention to maintain the impressive returns it has delivered in the past, consistently exceeding a 15% IRR (Internal Rate of Return).
In the first half of the financial year 2024, three of Blacksoil’s existing portfolio companies, namely Ideaforge, Yatra, and Cellecor Gadgets, made their debut on public exchanges. However, Bansal indicated that there are no immediate IPOs expected from the firm’s portfolio companies over the next six months, suggesting that such IPOs may still be some time away.
This successful debt fundraising will undoubtedly help Blacksoil continue its mission to support and empower emerging companies in the Indian business landscape.