An early-stage VC fund, Silverneedle Ventures has launched ₹100 crore fund with a focus on convertible note investments. 

Convertible note is a short-term debt extended by the investor, which later converts into equity. For instance, a debt extended in a seed round will convert into shares of preferred stock when the company closes Series A funding round. 

As start-up valuations drop, companies have started preferring convertible note investments as it allows for the valuations to be deferred until a later date. Speaking to businessline, on the demand for convertible note investments, Ajay Jain, Co-Founder and Managing Partner, Silverneedle Ventures said, “Over the past 7-8 years of my start-up investments journey, the demand for convertible notes has grown but I would like it to grow much more. West is much more conversant and we are catching up with it.”

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He added that convertible note is a neat instrument for a variety of reasons like investors getting a discount on the next round and still being able to signal the next investor on where the company’s valuation is. Jain believes that there are all the right reasons for an early stage or a bridge round to be a convertible note.

Silverneedle Ventures is a sector-agnostic early-stage technology fund, which invests in Pre-Series A and Series A funding rounds. The fund is focused on B2B SaaS, deeptech, sustainability, and D2C/consumer internet, among a few other sectors. Jain noted that the firm has 30 per cent global limited partners (LPs). 

Founded by Ajay Jain and Deepesh Agarwal who were also the founders of Xseed Partners, Silverneedle expects to do about 30 cheques with this new fund. The firm has already announced the first investment in a creator monetization start-up, Knorish.