The Covid-19-forced lockdown and the resultant sluggishness in the economy have spurred startup entrepreneurs to fortify their capital structure and streamline finances. With equity funding becoming dearer, venture debt is becoming the go-to option. Most venture debt fund managers have witnessed “a tidal wave of funding requests” in the past two months. Stride closed four deals during the lockdown, while peers Alteria and Trifecta claim to have concluded four to six deals between March and May. “Many of these companies are trying to raise debt because they do not foresee possibilities of an equity fund-raising in the immediate future. These companies are also not able to raise loans from banks or NBFCs. Traditional lenders do not usually lend to companies that are not profitable at an operating level,” Gandhi explained. Venture debt is a form of debt financing for venture equity-backed companies that lack the assets or cashflow for traditional debt financing. By borrowing money, the startup entrepreneur escapes further dilution of equity in the company. In 2019, as per Venture Intelligence data, these funds booked 67 deals worth $207 million. Between January and May this year, venture debt funds disbursed $56 million across 21 deals.