In a notable move within India’s growing fintech sector, VentureSoul Partners has made its first investment through its debut venture debt fund, injecting INR 20 Cr into True Balance, a lending tech startup. This investment marks the beginning of VentureSoul’s journey in venture debt, a form of financing that allows startups to scale without diluting equity. True Balance, operated by Balancehero India, will use the funds to expand its operations and continue its mission of offering financial services to underbanked populations in India.
A Strategic Debt Investment
True Balance, a subsidiary of the Korean company Balancehero Co. Ltd, has been steadily growing in the Indian market since its launch in 2017. Initially offering wallet services under a license from the Reserve Bank of India (RBI), the company transitioned into a non-banking financial company (NBFC) in 2019. Today, it offers loans of up to INR 1.25 lakh and utility bill payment services, targeting customers with credit scores of 650 and above. The fintech startup currently manages assets worth INR 1,100 Cr and boasts over 9 lakh active customers.
With this fresh infusion of INR 20 Cr, True Balance aims to expand its footprint in India, further strengthening its position in the competitive fintech landscape. The company competes with major players like MobiKwik, Paytm, PhonePe, and Navi, all of whom have a significant presence in the digital lending and payment space.
VentureSoul’s Ambitious Fundraising Plans
VentureSoul Partners recently achieved the first close of its maiden debt fund, securing INR 145 Cr out of a target corpus of INR 600 Cr. The fund is registered under SEBI as a Category II alternative investment fund (AIF) and has attracted commitments from family offices, corporations, high-net-worth individuals (HNIs), and other investors. This initial investment in True Balance signals the fund’s intent to back scalable, innovative startups that are addressing critical financial needs in the Indian market.
Growth Amidst the Funding Winter
True Balance’s rise comes at a time when debt funding is witnessing an all-time high, as startups seek alternative capital-raising methods in response to the ongoing “funding winter.” Many startups, including those in the fintech sector, are exploring venture debt as a means to fuel growth without giving up equity or ownership stakes. According to data from Inc42, debt investments in Indian startups more than doubled to $576 million in the first half of 2024, compared to $285 million during the same period the previous year.
This trend is part of a broader shift, where founders and shareholders are opting for debt financing to sustain growth while retaining control of their companies. Debt funding has become an attractive alternative, especially during periods when equity investments may be harder to secure.
True Balance’s Impressive Financial Performance
True Balance’s financial performance reflects its growing prominence in the fintech space. In FY23, the company reported a consolidated net profit of INR 58.8 Cr, a staggering 17-fold increase from INR 3.4 Cr in the previous fiscal year. Its operating revenue also saw significant growth, jumping 1.8 times to INR 431.1 Cr from INR 243.9 Cr in FY22. This impressive growth trajectory positions True Balance as a key player in India’s digital lending market, further solidified by VentureSoul’s recent investment.
The debt funding will likely help True Balance continue its upward trajectory, enabling it to serve a larger customer base and scale its services. The company’s success in the competitive fintech ecosystem will depend on its ability to leverage this new capital to refine its offerings, enhance its technology platform, and deepen its market penetration.
The Broader Context of Debt Financing in India
VentureSoul’s investment in True Balance is part of a larger trend where startups across various sectors are increasingly turning to debt financing. Just days before this deal, agritech startup WayCool secured INR 100 Cr in debt funding from Grand Anicut, and edtech giant Vedantu raised INR 19.25 Cr in a mix of debt and equity financing from Stride Ventures. Additionally, IPO-bound adtech company InMobi secured $100 million in debt from Mars Growth Capital last month.
These examples illustrate the growing appetite for debt financing in India’s startup ecosystem, as companies seek flexible financing solutions that allow them to maintain ownership while pursuing aggressive growth strategies.
Conclusion
VentureSoul’s INR 20 Cr investment in True Balance underscores the increasing importance of venture debt in India’s startup landscape. As fintech continues to transform the country’s financial services sector, companies like True Balance are poised to play a pivotal role in providing much-needed credit to underserved populations. With the backing of VentureSoul’s maiden fund, True Balance is well-positioned to expand its operations and continue driving innovation in the digital lending space.
This investment marks a significant milestone for VentureSoul and sets the stage for future investments aimed at empowering India’s growing ecosystem of tech-driven startups.
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