8vdX helps early-stage founders raise venture capital debt using the market model
At a time when tech startups struggle to raise equity, alternative sources of capital such as venture debt, convertible bonds, and bank funding have become a strategy to expand leads and fund the needs of crucial operations. However, the slowdown in funding is expected to hit early-career founders the most, as getting to the Series A stage is seen as crucial for survival. Many founders choose to raise pre-Series A or bridge rounds to build investor interest in their business before closing a larger, multi-million Series A round.
Mumbai-based venture capital debt marketplace 8vdX solves this problem by offering early stage startups bridging funding for their Series A or B by providing venture capital debt to achieve their goals and expand their track. Additionally, startup founders can easily and conveniently access venture loans through an intuitive interface and choose to repay in their local currency, including British Pounds, Singapore Dollars, and Australian Dollars. The company offers flexible, founder-friendly loans. If startups are unable to repay the loan, 8vdX has the option of turning debt into equity or continuing to be a lender, therefore it does not require personal guarantees from founders or force startups to file the balance sheet.
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Startups can choose to pay interest as equity or a combination of equity and cash. There is no cash flow from the startup’s bank account, and the 8vdX loan has no impact on the founders’ personal credit history. 8vdX chooses startups for underwriting and funding approval using data-driven underwriting techniques and based on their key performance indicators and growth metrics.
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Speaking to FE, 8vdX co-founder Ravi Chachra said only 20% of startups that get seed funding go on to raise a successful Series A round at a valuation that founders and investors are with. comfortable. However, providing venture capital debt to companies with minimal revenues is risky, as underwriting such loans could be difficult. 8vdX is working around this by instead partnering with big accelerators such as YCombinator in the US and funding their wallets instead.
When 8vdX was first created in late 2021, it first provided loans of $150,000 to startups admitted by Y Combinator, and the loans were to be repaid once the companies graduated or continued to raise institutional funds.
8vdX has also been able to attract interest from individual investors in India and around the world, and has therefore moved closer to a market model connecting investors directly to founders seeking bridge funding.
“If a founder is admitted into Y Combinator, it means that they are most likely going to raise venture capital funds after graduation. And the average Y Combinator company raises between $1 million and $1.5 million in seed funding and nearly a third of them go on to raise Series A and above. We’ve found a way to underwrite early-stage startups by underwriting the entire Y Combinator program rather than individual startups,” Chachra added.
8vdX initially started with over 35 investors who invested in the first batch of Y Combiantor startups in 2021. The company is currently in talks with several accelerators and venture capital funds in India and abroad to expand its footprint. “Currently, we have around 112 investors on the platform, and it’s growing a little every day. We plan to grow our AUM to $200 million and we will invest this corpus in 100 companies over the next 24 months,” Chachra said.
The 8vdX marketplace currently has an AUM of $10 million and has funded over 20 early-stage startups since its inception, including 3 in India and 4 in Africa. On Wednesday, the company announced that it was expanding its operations to Singapore, the UK and Australia. The company aims to offer cross-border venture capital debt to startups through local entities in these geographies.