Alteria Capital, the biggest venture debt fund in India, has announced the first close of its third fund at ₹1,000 crore. It got approval from Securities and Exchange Board of India in Q2 for the third fund, with a target corpus of ₹1,000 crore, and a greenshoe option of ₹1,000 crore. Alteria Capital manages nearly ₹3,800 crore ($475 million) across its three venture debt funds.

Despite the macroeconomic volatility, domestic investors, including institutions, large family offices, senior professionals and founders of startups, showed strong interest in this attractive asset class, senior executives of the fund said.

“This is our third fund in five years, which signals the strong momentum in venture debt, as a growing asset class in India. Consistent, stable returns over the years with strong credit risk performance and upside potential from equity kickers proved to be a healthy combination for investors," Vinod Murali, co-founder and managing partner, Alteria, said.

The fund will back early and growth-stage startups, which have raised funding to provide a range of specialty debt solutions and offer cheque sizes of up to ₹150 crore. It also has a separate scheme to offer working capital solutions.

“For the venture debt asset class India is a relatively young market compared to its global peers which reflects a significant opportunity to raise and deploy capital. With the third fund, we hope to play a meaningful role in bridging this gap over the next few years," said Punit Shah, managing partner, Alteria. Alteria was started in 2017 by Murali and Ajay Hattangdi.

The team had pioneered venture debt in India and funded over 250 startups in 15 years. Alteria has over 100 portfolio firms, including Infra.market, Rebel Foods, Dealshare, Spinny, Mensa Brands, BharatPe, Dunzo, Cars24, Good Glamm Group, Niyo, EarlySalary, Zepto, Lendingkart, and Portea, Toppr, among others.