We've reduced our exposure in the fintech space, especially since last year's digital lending guidelines by the RBI: Ankur Bansal, Co-founder & Director at BlackSoil Capital

In this podcast, businessline’s Isha Rautela is joined by Ankur Bansal, Co-Founder and Director at BlackSoil Capital, who discusses the company’s investment journey and the state of the start-up ecosystem, particularly in terms of venture debt.

Bansal acknowledges that the start-up ecosystem faced challenges securing funding, but more recently, it has shown signs of improvement. Venture debt typically aligns with new rounds of capital, so the slowdown in equity investments also affects venture debt. However, he notes that the market has adapted by working with companies that have raised larger rounds or have sufficient liquidity from previous funding.

Bansal emphasises the importance of underwriting and finding businesses that truly need venture debt to address specific use cases, such as reaching breakeven or improving unit economics. He mentions that companies in India are increasingly focusing on becoming cash flow positive, which has led to improvements in stock prices and is seen as a positive trend.

When discussing Black Soil Capital's core investment strategy, Bansal highlights the importance of profitability and mentions that a significant portion of its portfolio comprises EBITDA-positive companies.

Regarding sectors to avoid, Bansal mentions businesses with poor gross profit margins, as well as those in sectors with headwinds or unpredictability. For instance, he highlights their avoidance of sectors like fintech due to various factors, including market conditions and regulatory changes. He also mentions their current focus on the EV and climate tech spaces.

Bansal also mentions the international market's growing interest in start-up investments, especially in regions like MENA and Southeast Asia.   

When asked about Black Soil Capital's future plans, Bansal hints at upcoming announcements related to new funds but doesn't provide specific details. He stresses the continuous fundraising and deployment of capital as a fundamental part of their business model and indicates a willingness to collaborate with banks and financial institutions to provide insight into the start-up ecosystem. Listen in.  

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