Data Vantage: The venture debt opportunity in SE Asia

Startups in Southeast Asia are beginning to favour venture debt as they seek to extend their runways or obtain financing without diluting shareholder equity.

The potential venture debt opportunity in the region is pegged at between $490 million and $980 million annually, according to PwC projections. The estimates are based on SE Asia’s three-year average of venture funding ($9.8 billion per year) and a 5-10% share of the total pie.

Source: PwC. Note: 2021 figures are estimates

In SE Asia, venture debt is still a relatively young asset class but is steadily getting recognition. According to a study by Kruze Consulting, venture debt comprised just 1-3% of overall venture funding in Southeast Asia, compared with 10% in the US, in 2019.

Recognising the importance of venture debt, the Singapore government in February extended and enhanced its Enterprise Financing Scheme – Venture Debt programme to support the growth of later-stage enterprises. The government raised the maximum loan quantum from S$5 million to S$8 million for new applications from 1 April 2021.

Experts see Southeast Asia’s startup ecosystem following in the footsteps of India, where businesses have actively tapped venture debt to finance their growth and expansion over the last decade. In 2020, venture debt financing was estimated at approximately 8% of total venture funding, or worth approximately $800 million, in India, up from between 4% and 5% in previous years.

As a result of this growth, India’s venture debt funds have attracted greater interest as investors seek to hedge themselves against riskier pure equity bets on startups. The total amount raised by venture debt funds from private equity and venture capital debt funds jumped from $62 million in FY 2019-20 to $85 million in FY 2020-21, according to data from Venture Intelligence.

Recent venture debt fund closes in India and SE Asia

In April, Genesis Alternative Ventures, a Singapore-based venture debt firm, closed its debut fund at $80 million, exceeding its target of $50 million. The fund, Genesis Alternative Ventures Fund I, was anchored by Singapore’s Sassoon family.

In December, Alteria Capital announced plans to close its second venture debt fund by the first half of this year, eyeing a ₹1,000 crore ($134 million) corpus with a green-shoe option of ₹750 crore ($101 million).

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.