India's two most active startup investors in the third quarter weren't equity funds. Stride Ventures backed 38 startups and Alteria Capital 31, compared with 19 investments by 3one4 Capital, the busiest traditional VC. This doesn't mean debt has overtaken equity funding, but it shows how founders are finding ways to raise money without cutting their valuations.
India's venture debt market grew from $80 million in 2018 to $1.3 billion across 187 deals in 2025. The appeal is obvious. If a startup needs ₹100 crore but equity investors won't accept its old valuation, borrowing lets the founder retain most ownership and allows existing investors to avoid marking down their investment. Nobody has to admit the company may be worth less than it was two years ago.
But a loan doesn't fix an expensive business. At 14% interest, ₹100 crore of outstanding debt costs ₹14 crore annually before principal repayments. If the startup is already burning cash, that bill only brings the next funding crisis closer.
There are sensible reasons to borrow. Ultrahuman raised ₹100 crore from Alteria in 2025 after reporting FY25 revenue of ₹565 crore and net profit of ₹73 crore. For a hardware business, financing inventory and expansion with debt can be cheaper than repeatedly selling shares. The question is whether cash coming in can cover repayments.
Recur Club's new ₹500-crore financing programme for D2C brands shows why demand is growing. A beauty brand supplying Amazon, Blinkit and Zepto must pay manufacturers long before it receives money from sales. Borrowing against inventory can help, provided products actually sell. If demand falls or discounts rise, the inventory loses value while the loan remains unchanged.
We've already seen what happens when cash runs short. In 2024, ReshaMandi reportedly sought a one-year repayment extension, while WayCool and Good Glamm also faced debt-related pressure. These aren't proof of an industry-wide crisis, but they challenge the idea that debt is a painless substitute for equity.
Lenders can also become powerful without owning many shares. Existing shareholders bear much of the loss, while the lender can influence whether a sale happens.
Venture debt is useful when it finances growth that generates cash. When it merely postpones a difficult valuation decision, founders haven't escaped the problem.
Let’s go through what else is happening in Indian startup world - Grab your simmering cup of StartupChai.in and unwind with our hand-brewed memes.
“Rula Diya Na Bechari Ko”: Anthropic Curbs Sustained Abuse Of Claude
Anthropic has revised its usage policy to prohibit sustained and needless abusive behaviour towards Claude. Effective November 12, Claude may end persistently abusive conversations after attempts to redirect the interaction fail.
The rule targets extreme cases involving repeated cruelty without a discernible purpose.
Read more here
“Ghodo Ke Race Mein Gadha”: Tamasha Studios’ Abhik Banerjee Wins
Abhik Banerjee’s AI film Sitara won second place at Kazakhstan’s Astana AI Film Festival, bagging $200,000.
The festival received 8,067 entries from 125 countries, with only 25 films reaching the final competition.
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“Achha Toh Hum Chalte Hai”: Peak XV Sells Awfis Shares
Peak XV sold Awfis shares worth around ₹30 Cr as the coworking company’s stock continues to slide.
The VC firm has now diluted over half its stake, reportedly looking to cut losses.
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“Mubarakan Ji Mubarakan”: JSW MG Motors India Announces Winners
JSW MG Motor India has announced eight winners of its MG Developer Program 2026, spotlighting startups in mobility, EVs and AI.
Since 2019, the initiative has attracted over 1,680 startup entries.
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“Chalti Ka Naam Gaadi”: Amazon Layoffs Hit India Again
Amazon has laid off around 100 employees in India as part of global job cuts affecting fewer than 1,000 workers.
The cuts come as the tech giant plans a massive $220 Bn investment in AI infrastructure.
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“Kuch Daring Karna Hai”: VinFast Lines Up Electric Motorcycle Outlets
Vietnamese EV maker, VinFast plans to open 50 electric motorcycle showrooms across 34 Indian cities in 15 states and UTs. The company also aims to expand charging infrastructure and after-sales services.
The expansion marks VinFast’s entry into India’s electric two-wheeler segment.
Read more here
“Ek Aur Naya Product”: BuyBuyCart Launches B2B Ordering Platform
BuyBuyCart has launched a centralised B2B platform for wholesale and franchise orders. It offers state-wise order tracking, sales analysis, franchise monitoring and product-level performance insights.
The company plans to let franchise partners place routine and replenishment orders directly through the portal.
Read more here
“Aaiye Aapka Intezaar Tha”: OTPless Appoints New CTO
OTPless has appointed former BharatPe engineering head Geetanshu Singla as its new CTO amid a leadership reshuffle.
Singla previously co-founded senior-citizen lifestyle startup GenWise, which shut down last year.
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Nat Habit raised ₹142 Cr in a Series C round led by Trident Growth Partners to expand offline and reach more consumers.
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NeoGrowth raised ₹85 Cr from FMO and LeapFrog Investments to strengthen digital lending for MSMEs.
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Menswear brand KISAH raised ₹35.9 Cr from Fireside Ventures to expand its retail footprint from 12 to 100 stores.
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NABVENTURES has raised ₹450 Cr in the first close of its second fund, targeting a total corpus of ₹1,500 Cr.
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Cold-pressed oil brand Gramiyaa raised ₹18.65 Cr in a Series A round at a ₹110 Cr valuation.
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