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InnoVen Capital funds Toppr with $2 million in venture-debt

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InnoVen Capital funds Toppr with $2 million in venture-debt .

Bengaluru, INDIA | Red Newswire. Fri, Oct 30 2015. 12:03 PM IST.

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Toppr, an online platform that helps students prepare for entrance tests and board exams, on Wednesday said it has raised $2 million from venture-debt provider InnoVen Capital, in a deal finalized in the last week of September.

Venture debt is one way that start-ups that have raised some money and are confident of their business model raise more capital, with no loss of equity, as opposed to giving up equity or raising convertible debt, which is a hybrid part-debt, part-equity model.

Start-ups that have taken the venture-debt financing route include ad-tech firm InMobi Technologies Pvt. Ltd, mobile recharge firm Freecharge (owned by Snapdeal) and customer relationship management solutions provider Capillary Technologies Pvt. Ltd.

This fund-raising comes six months after Mumbai-based Toppr (owned by Haygot Education Pvt. Ltd) raised $10 million in a funding round led by venture capital firms Fidelity Growth Partners India and existing investors, SAIF Partners India and Helion Ventures. In 2014, it raised about $2 million from SAIF Partners and Helion Ventures.

Zishaan Hayath, who co-founded the company in 2013, and who is an angel investor in companies like Ola (ANI Technologies Pvt. Ltd), Zo Rooms (Zostel Hospitality Pvt. Ltd.) and DoorMint (Blackcotton Solutions Pvt. Ltd), said that Toppr plans to use the funds for two acquisitions.

Toppr bought EasyPrep, which provides an online and offline platform for schools, coaching institutes and teachers to create exam papers for classroom teaching, student assessment and helping students prepare for competitive examinations, for an undisclosed amount in April.

The platform has about 500,000 enrolments and is on its way to enrol 500,000 more in the next three-four months, said Hayath.

“We’re seeing a lot of activity in the education space and Toppr is one of the leading contenders of the segment in India, especially in digital education and test prep,” said Vinod Murali, managing director, InnoVen Capital India Pvt. Ltd.

This is the second test-preparation start-up that InnoVen has lent money to, after investing $500,000 in Embibe (Indiavidual Pvt. Ltd).

Murali said that it was a large enough market. “We think there’s enough room for growth. Over the last 5-6 years different companies have targeted the education sector in India but only recently in the last 18-24 months has it been truly coming of age and now you’re seeing that translate to robust companies,” he said.

“Since we provide venture debt and not equity, we do not take board seats typically, and we are not conflicted in providing this form of financing to multiple companies in a similar space or industry,” Murali added.

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