Singapore VC firm raises start-up debt fund amid depressed valuations
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South-east Asia remains a challenging financing market as many of its still-unprofitable start-ups are deemed high-risk by the world’s venture investors.
PHOTO: LIANHE ZAOBAO
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SINGAPORE - Genesis Alternative Ventures, a private lender to ventures and growth-stage companies, closed its second debt fund at the lower end of its target as global investors remain cautious about South-east Asia’s start-up industry.
The Singapore-based firm raised US$125 million (S$163 million) for the fund to finance young companies across South-east Asia, securing new investors including Japan’s Mizuho Bank and Israel’s OurCrowd. The fund had sought US$120 million to US$180 million, and took more than two years to reach the close.
Venture lending, or loans offered to start-ups, has attracted growing interest in recent quarters as companies tap the debt market instead of raising equity. A cloudy global economic outlook has battered tech companies’ valuations, and venture firms have been struggling to raise capital amid a depressed market for initial public offerings (IPOs). Still, South-east Asia remains a challenging market for raising both debt and equity, as many of its still-unprofitable start-ups are deemed high-risk by the world’s venture investors.
“It’s never easy to raise funds, and it’s been more difficult in this environment,” Dr Jeremy Loh, co-founder and managing partner of Genesis, said in an interview. “This is a period of time when founders must be able to demonstrate that they can grow at a sustainable pace without relying on too much equity.”
More than 80 per cent of the investors in Genesis’ first fund – such as Aozora Bank, Korea Development Bank and Silverhorn Group – also invested in its newest fund.
The second fund has already lent more than US$20 million to nine start-ups including Aonic, Eezee and Akulaku, Mr Loh said.
Genesis extends debt to start-ups that do not typically qualify for regular bank loans because they lack collateral or have not yet reached profitability. The company’s first US$90 million fund has financed 25 start-ups from Series A to pre-IPO in South-east Asia. Its portfolio companies include Jakarta-based online lender Akulaku and buy now, pay later start-up Pace. BLOOMBERG
