LetsVenture launches N+1 Capital debt fund; gets SEBI nod to raise Cat-II AIF of $100M

LetsVenture, an early-stage investment firm, on Friday, announced the launch of its revenue-based growth capital firm N+1 Capital. According to a statement, the firm has received a go-ahead from SEBI to raise its first Cat-II AIF of $100 million in India ($75 million + $25 million greenshoe).

N+1 Capital (also known as NP1 Capital) is a Cat-II AIF, and the first revenue-based growth capital fund in India. Revenue-based growth capital (RBGC) is an alternative method of raising capital for entrepreneurs where investors receive a percentage share of the ongoing monthly gross revenue of the businesses they invest in.

LetsVenture, a founding venture partner of N+1 Capital, completed 105 funding rounds across early and growth-stage startups in 2020. On average, the fund receives almost 4,000 startup applications annually, many of whom are well-suited for debt financing. 

Rahul Chowdhury, Managing Partner, N+1 Capital, said the vision of the fund is to provide over 100+ entrepreneurs an average of $1 million each to grow their businesses profitably and sustainably through their growth stage.

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In a conversation with YourStory, Rahul Chowdhury, Managing Partner, N+1 Capital, said, "N+1 is sector agnostic, and the qualifying criteria are actually steady-state and growing startups and MSEs with minimum monthly revenue of Rs 50 lakh, and at least 30 percent gross margin. Having said that, the fund is currently working with SaaS startups and some Direct-to-Consumer (D2C) startups."

Rahul and Ashish Singla (Managing Partner, N+1 Capital) saw a gap in the market where strong founders and businesses wanted to raise working capital or extend business runways, but they were facing difficulties to dilute equity or provide large collaterals, which seemed quite onerous.

Thus, the idea for N+1 Capital germinated in March 2020, when they were staying in during the nationwide lockdown.

"Revenue-based financing (which is a common funding mechanism in mature markets like the US and Europe) was a good fit for these businesses with strong fundamentals. This is how N+1 Capital came about," Rahul added.

Speaking on the development, Ashish Singla, Managing Partner, N+1 Capital, said, “The traditional world of investing is all about the people one knows, warm introductions, and recommendations. While human relationships are great and necessary, they can be vulnerable to bias. While there has been significant innovation on the fundraising side, the investment business model still works like it always did."

He added, "N+1 is trying to bridge this gap. We have a data-driven risk assessment technology model that makes the product accessible for new-age entrepreneurs, and minimises human bias in decision making."