Caspian Debt to fund Rs 500 crore next fiscal
Keen to extend funding to 500 entrepreneurs in next three years.
Hyderabad-based Caspian Debt, which offers customised debt to small and mid-market businesses as well as startups, has so far provided non-dilutive funding of Rs 2,000 crore to 151 companies across India. Caspian initially lent financial institutions, food and agriculture companies, but over the years expanded its horizon to other sectors such as clean energy, healthcare, education, and water, sanitation and hygiene (WASH). S Viswanatha Prasad, founder & MD, Caspian Debt, tells Telangana Today, his future plans and how the company is making ‘impact investment’.
Funding scenario
Funding for small businesses in India has improved over the years through banks and NBFCs, but if these companies have to scale up their profitable businesses by raising funds through equity, they will lose control of their company for at least 3-4 years. We estimate that at least 25 per cent of these businesses looking for funding can take the debt route. Caspian Debt is catering to companies with a Rs 3-5 crore loan requirement, as other alternatives give them access to lower amounts. We understand and evaluate the cash flow and business risk, and fund these businesses with an equity investor and banker mindset.
Access to finance
Caspian Debt has funded 151 companies so far and we plan to take this number to 500 companies/entrepreneurs in the next three years. We have so far funded about 12-13 companies based in Hyderabad and about 35 companies with businesses in Telangana. We have enough capital and in the coming fiscal (FY22), we want to at least fund Rs 400-500 crore. Of this amount, about half to two-third will go to companies in core sectors while the remaining money will be lent to financial companies that will further lend to small businesses. In addition to funding businesses, we help them in building their network, improve governance and transparency.
Impact investment
We want to bring all types of capital to businesses that do good through their products or services, be it in terms of making economic impact to their clients or through environmental or other forms of social impact. We do our macro-analysis and lend small financial inclusion companies who lend smaller amounts to smaller businesses, agritech companies with farmer connect, education content companies that have specific offerings for private schools in the bottom of the pyramid, and healthcare companies catering to tier-2 and tier-3 cities.
Covid impact
This is the first time that companies had to be prepared for a zero revenue scenario for several months. In the first three months of Covid pandemic outbreak, 70 per cent of our portfolio companies were adversely impacted, while about 20-25 per cent companies were positively impacted, which were primarily into organic farming, edutech and healthcare. Entrepreneurs of SMEs in India have shown resilience and they are on the path to recovery.
Healthcare
For several years, telemedicine was tried and tested in India. There is today potential to use technology in healthcare in many non-critical areas. We have recently funded a dental company which has a scanner that can be sent to a patient’s home, scan mouth and teeth, take an x-ray and enable further treatment. Both medicine discovery and distribution are going to have growth opportunities in the coming years.
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