Car financing startup OTO Capital secures venture debt from Stride Ventures

OTO Capital, which provides financing option for two-wheeler buyers, has raised funding from venture debt firm Stride Ventures.

According to regulatory filings, Stride Ventures has extended Rs 6 crore to OTO Capital.

Of the total, Stride Ventures has provided Rs 5 crore in the form of non-convertible debentures (NCDs) and the remaining Rs 1 crore through compulsory convertible preference shares (CCPS).

The venture debt round comes almost a year after OTO Capital raised $6 million in its Series A funding led by Matrix Partners India in late August last year. Existing and new investors such as Prime Venture Partners, 9Unicorns and Better Capital had also participated in the fundraise.

Startups in the fintech space are expected to lead the way in raising venture debt this year similar to the trend seen last year, according to findings of the survey conducted by Stride Ventures earlier this year.

In June, Stride Ventures extended venture debt of Rs 50 crore to credit and payments-led fintech startup, Uni.

Email queries sent to OTO Capital and Stride Ventures did not elicit a response.

OTO Capital, operated by 1T9 Technology Pvt. Ltd, was co-founded by IIT Bombay alumni Sumit Chhazed and Harsh Saruparia in October 2018. The startup provides financing option for two wheeler buyers that requires customers to pay an upfront amount like any other loan but get up to 30% lower EMIs with an option to retain, return or upgrade at the end of the tenure. It has tie-up with banks and non-banking finance companies (NBFCs) to provide finances to its customers.

Venture debt has hotted up in India over the past few years as it rarely involves stake dilution by founders and provides startups with more time to grow.

Stride Ventures is currently raising its second fund. In April, VCCircle reported that the venture debt financier is set to exceed its target corpus of Rs 1,000 crore for its second fund to raise around Rs 1,600 crore. Its debut fund was launched in 2019 with a corpus of Rs 350 crore ($49.6 million at then exchange rate) and a greenshoe option of additional Rs 150 crore.

Stride Ventures’ investments include distribution and logistics ecosystem platform Ripplr, Spinny, Infra.Market, Manipal hospitals-backed Phable, clinical beauty tech startup Toothsi and B2B manufacturing startup Groyyo.