Hong Kong-based online apparel brand Grana, which had earlier raised $16 million in venture funding from backers including Alibaba, has now raised an undisclosed amount in venture debt from Hong Kong asset manager STI Financial Group.
The three-year-old apparel e-commerce startup will use the funds to improve cash flow management and advance its use of Artificial Intelligence (AI) to improve customer engagement and website functionality, it said on Friday.
The venture debt enables the company to grow its business without having to dilute its current share capital. It will also be used to “pave the way towards a Series B round at the end of 2018,” the company told DEALSTREETASIA via email.
The startup founded by Australian entrepreneur Luke Grana had earlier raised $16 million in funding from 500 Startups, Alibaba’s Hong Kong Entrepreneurs Fund, Golden Gate Ventures and MindWorks Ventures. The amount includes $6 million in seed funding and $10 million in Series A funding round by the Alibaba fund.
Venture debt is being increasingly seen as a preferable funding method for startups that do not want to dilute more equity. “Venture debt is complementary to multiple stages of financing and will gain momentum in Asia as an alternative capital solution in the coming years,” said Cyrus Wen, Partner at STI Financial Group.
However, Grana does not plan to raise any additional venture debt rounds in the future as it has raised the amount it set out to raise, the company told this portal.
The startup has a 18,000-sqft global distribution centre that ships to 67 markets. It has also opened 15 pop-up showroom experience centres across Hong Kong, Singapore, the US and Australia.
The e-commerce segment in Asia is witnessing intense competition with bigwigs like Alibaba, JD.com, SoftBank and Amazon vying with each other to grab a pie of the market. In both the horizontal e-commerce space and specialist players like fashion, the region has seen investments from big players, sometimes even in competing brands.
In this backdrop, Grana feels, “if anything, it (competition) will encourage more brands to make quality products at a competitive price for customers which is not the standard at the moment.”