As an early-stage family office that backs companies at the start of their business-building journeys, we are empathetic to the time and effort involved in figuring out team hiring, adopting the best GTM, ironing out operations, and the several other nuances which never make the front-page media of success stories. For some startups, this is a process over months, and for most this may be years.

Typically, most surveys state that the single biggest fear of startup founders is that the business may run out of cash/ they wouldn't be able to raise the money they need. Usually, once a VC has backed a company, the only way founders can raise from the same VC is:

·         In most cases, in the next round, when other larger VCs participate, where the VC puts in the cash to maintain his stake

·         In some limited cases, in a bridge/ down round or a convertible round if the VC sees some validation towards a future path

In case a company’s execution falls below expectations, VCs, as stated above, may still extend a bridge round to help the startup buy some time for the delayed execution. But in most cases, VCs cease funding the startup anymore.

A VC, by its mandate, cannot provide any short-term debt funding to its portfolio startups. While there has been an explosion of venture debt in India, in our view, most of the debt is concentrated in later-stage companies and is usually combined with a late-stage funding round. This means that companies that are attractive to large VCs are the ones with easy access to venture debt – hardly solving the problem! Similarly, while new-age lenders, offering RBFs/monetizing future collections, are emerging, these are far and few between and often cater to a particular sector/ niche.

As a family office, one of our key differentiators is our ability to support our portfolio startups with company-friendly short-term debt/ RBFs. We believe that having access to a potential short-term credit line is invaluable to a growing company especially once one which requires working capital to grow.

We recently provided short terms loans to two of our portfolio companies in the education space. Bibox undertakes experiential learning initiatives in schools to teach, develop and mentor students by providing them with innovative kits/ projects in areas of design thinking, web development, mechanics, amongst others. While Avaz creates affordable assistive technology for communication and learning including robust AAC apps for people and apps for Dyslexia.

We are keen to support our portfolio, however remain disciplined in our approach. Our guiding factor in determining the loan amount is the ability of the company towards servicing the loan through its internal accruals without the need for external investment. Similarly, being portfolio startups, we have the benefit of past association with the management team to help build conviction towards repayment.

Ultimately, we want to help entrepreneurs craft a win-win agreement for long-term success. You may also read about the experience of our portfolio founder, Siddhant of VdoCipher who availed RBF from us.