Insurance companies and wealthy individuals are increasingly interested in investing in venture debt funds thanks to their fixed income nature and track record, say fund managers. The past few months have seen many venture debt deals and the launch of several venture debt funds. Traditional debt financing (i.e. loans from banks, non-banking financial institutions and other institutional lending platforms) is typically not available for early stage start-ups, given tough conditions required to be fulfilled by entities borrowing from such platforms. Here, venture debt has an advantage. With evolving regulations over the last couple of years, more institutional investors such as insurance firms are allowed to invest in alternative asset classes and these investors have shown a strong interest in venture debt.

(Live Mint)