TLDR:
- Several startups that took venture debt are now seeking extensions for loan repayments
- Good Glamm Group, Reshamandi, and Arzooo are among the startups facing challenges
Several startups that turned to venture debt to ease their liquidity concerns until their next fundraising are now seeking extensions for repaying those loans. The Good Glamm Group, Reshamandi, and Arzooo are some of the startups facing challenges in meeting their debt obligations. Venture debt, which is offered to startups already backed by venture capital firms, is becoming increasingly important as startups navigate a tough macroeconomic environment. The requests for extended repayment timelines are causing concerns in India’s startup ecosystem, particularly during the continued funding winter.
Reshamandi, which raised funds from Stride Ventures, is struggling to pay vendors and has requested a one-year extension for debt repayments. Arzooo, backed by Trifecta Capital, has also faced challenges, with delayed salaries reported in the past. Additionally, agri-tech startup Waycool Foods and Products Pvt. Ltd has sought similar extensions to its venture debt repayments. Despite these challenges, venture debt backers are evaluating extension requests based on the potential for startups to survive and bounce back. They are also considering additional security or incentives to mitigate risks.
Green shoots are on the horizon, with venture debt firms seeing potential in early-stage deals and expecting growth-stage investments to pick up later this year. Last year, India’s venture debt market surpassed the billion-dollar mark, indicating rising confidence from founders, venture capitalists, and investors. This trend reflects the market’s maturity and the sophistication of venture-debt solutions tailored to the needs of startups.
