Genesis

The PDF version of this media release can be downloaded here

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Genesis Alternative Ventures closes Southeast Asia’s first venture debt fund at US$80 million

Total commitments from investors exceed target range
Institutional commitments include Aozora Bank, Korea Development Bank, PT Bank CIMB Niaga
Genesis deploys US$30 million to tech companies, seeks those with profit-for-purpose mission

Singapore, 15 April 2021 – Singapore-based Genesis Alternative Ventures has closed Southeast Asia’s first venture debt fund at US $80million, exceeding the top end of its target range.

Investors in Genesis Alternative Ventures Fund I, anchored by Singapore’s Sassoon family, include Japan’s Aozora Bank, Korea Development Bank (KDB) and Hong Kong multi-asset investment firm Silverhorn Group. Earlier commitments include Indonesia’s PT Bank CIMB Niaga and Seattle-based global investment impact fund Capria Fund.

Tokyo-based Aozora Bank is a publicly-listed financial institution that operates through 21 domestic and five overseas offices. As at 31 December 2020, it has total assets of about 5.6 trillion yen (US$51 billion). In November 2019, Aozora Bank established a two billion yen (US$18 million) fund to provide venture financing to domestic venture firms.

State-owned KDB is a policy development bank in South Korea with total assets exceeding US$230 billion. By collaborating with Genesis, KDB hopes to facilitate the expansion of Korean technology firms into Southeast Asia.

Overall, financial institutions, fund-of-funds and family offices accounted for about 75% of total commitments from investors across Asia, Europe, the Middle East and the United States.

Dr Jeremy Loh, Co-Founder and Managing Partner at Genesis Alternative Ventures, said: “Venture debt in Southeast Asia has been thrust into the limelight during the Covid period with entrepreneurs seeking more efficient capital and putting in place additional capital buffers.

“We are thankful for the strong support of our investors who have embraced the venture debt model in Southeast Asia. We are equally delighted with the robust quality of our portfolio companies. A growing number of them are making a positive impact to society and the environment, underscoring Genesis’ profit-for-purpose commitment.”

More than US$30 million of venture debt deployed to SE Asia tech companies

To date, Genesis has deployed over US$30 million to a growing portfolio of 12 venture-backed companies across Southeast Asia. They include Horangi Cyber Security, Indonesia’s flexible space provider GoWork, Lynk Global – an on-demand expert network platform as well as Believe, a B2B FMCG startup.

Another portfolio company, Matterport Inc, an expert in transforming buildings into digital spatial data, has announced in February 2021 that it has entered into a definitive agreement that will result in Matterport becoming a Nasdaq listed company via a SPAC.

Investing in for-profit companies that deliver impact at scale

Genesis is committed to investing in companies with the potential to generate sizeable financial returns while delivering sustainable positive impact.

Genesis counts Flow, Deliveree, Tanihub and Trusting Social among its impactful portfolio investments. The latter leverages AI and big data to enable financial inclusion for the underbanked, while Flow focuses on ethical, digital consumer debt collection in various Southeast Asian countries. Indonesia’s Tanihub gives fairer rates to Indonesian farmers, provides microloans for their crop and grows their businesses. Through its Driver Partner Benefits Program, Deliveree aims to generate better income through lowering the costs of maintaining their vehicles.

Growing importance of venture debt in Southeast Asia

Venture debt, generally deployed by way of senior, secured non-convertible debenture accompanied by equity options, is appropriate for emerging, high growth businesses that need to extend their cash runway to get to the next stage of growth. These companies may lack the track record to meet traditional criteria for bank loans or their founders may wish to minimise equity dilution.

Global data suggests there is significant headroom for venture debt to grow in the region. A recent study by Pitchbook notes that in the US, venture debt has grown at a faster pace than the broader venture capital market and that 2019 and 2020 were record years for tech companies raising debt. By comparison, venture debt makes up an estimated 2% to 4% of overall venture funding in Southeast Asia last year. While trailing US venture debt deployment, venture debt in Southeast Asia continues to gain traction as qualified deal flow continues to grow 31% quarter on quarter on an annualised basis since January 2020.*

*Internal Genesis statistics (2020 – 2021)

Genesis to host forum on venture debt and impact investing in May 2021

Genesis will host an online forum for industry leaders and thought leaders to share their experiences and exchange ideas on the venture ecosystem, specifically as it relates to capital raising, venture debt and impact investing.

The Genesis Forum, (http://www.genesisventures.co/forum2021), organised in collaboration with Institute of Innovation and Entrepreneurship at Singapore Management University (SMU) and PricewaterhouseCoopers Singapore (PwC Singapore), will take place on 6 May 2021. Dato’ Sri Nazir Razak, who is the Founding Partner and Chairman of Ikhlas Capital and former Chairman of CIMB Group, will deliver the keynote address. Genesis and PwC Singapore are also expected to release a first-ever industry-wide paper on venture debt in Southeast Asia at the forum.

Genesis was founded by Ben J Benjamin, Dr Jeremy Loh and Martin Tang in 2019.

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An article written by Venture Capital Journal. Read the full article here.

Venture debt is growing faster than traditional equity financing and faster than the wider VC market, according to a recent PitchBook report titled Venture Debt a Maturing Market in VC.

It thus “makes sense that the growth of venture debt has outpaced the broader VC market,” the report noted. “More companies receiving institutional venture backing equals more potential borrowers for lenders, in many ways making venture debt a dependent variable.”

The PitchBook report claimed venture debt has been split evenly between early and late-stage companies over the last decade in terms of financing count. ButPitchBook’s methodology treats convertible loans as venture debt, which is hugely popular in the early-stage.

“Recently, even seed-stage loans have caught up [to late stage], largely because of the increased use of convertible notes for these investments,” the report said.

Read the full article here.

An article written by Financier Worldwide. Read the full article here.

Amid the ongoing economic uncertainty emanating from the coronavirus (COVID-19) pandemic, an increasing number of capital-hungry companies are turning to venture debt as a relatively speedy way of accessing new funding.

Venture debt, as defined by the Corporate Finance Institute (CFI), is a type of debt financing obtained by both early and late-stage companies. It is typically used as a complementary method to venture equity financing and can be provided by both banks specialising in venture lending and non-bank lenders.

“Companies are operating in a very uncertain environment and businesses with solid fundamentals want to have an extra layer of a cash buffer to be able to steamroll ahead of their competition,” says Dr Jeremy Loh, co-founder and managing partner at Genesis Ventures. “Raising equity in this environment could mean a lower valuation that could hurt their next financing round ambition. An added advantage of venture debt comes in the form of bringing lenders that are sophisticated about innovative and disruptive new economy businesses into the capital stack and capitalisation table.”

Within the world of aspiring unicorns, entrepreneurs are optimistic about the use of venture debt, with many expecting the impact of COVID-19 on venture markets to lead to a permanent increase in the use of venture debt.

Read the full article here.

Indonesian social commerce platform RateS has closed a Series A round led by Vertex Ventures Southeast Asia & India, and venture debt firm Genesis Alternative Ventures.

An article written by Garage – Businesstimes.com.sg. Read the full article here.

The undisclosed funding will be used to accelerate RateS’ expansion in Indonesia’s underserved tier two and three retail markets via its reseller base of more than 500,000 agents.

Jake Goh, CEO and co-founder of RateS, said the company has seen resellers’ incomes increase by up to 50 per cent since joining its platform.

“As with many other models we have seen, e-commerce marketplaces in South-east Asia have long evolved into a race-to-the-bottom with cash serving as the only standing moat,” said Chua Joo Hock, managing partner at Vertex Ventures Southeast Asia & India.

Read the full article here.

An article written by Bisnis.com. Read the full article here.

PT Bank CIMB Niaga Tbk. collaborates with Genesis Alternative Venture (Genesis), a leading venture debt company in Southeast Asia to channel financing to Indonesian start-ups with a total commitment of IDR 300 billion.

CIMB Niaga Head of Commercial Banking Widodo Suryadi said that one of the company’s priorities is to support and assist customers and partners, including start-ups so that they can mutually maintain business continuity. Therefore, the funding commitment that has been prepared with Genesis is expected to be an alternative source of funding for potential start-up companies that have not met the criteria for conventional bank loans.

“Together with Genesis, we will continue to seek and provide financing for potential start-ups while at the same time expanding the funding ecosystem for start-up companies in Indonesia,” added Widodo.

As is known, venture debt is a form of financing that is directed to companies developing that shows great growth prospects and the need to maintain and extend its cash runway to reach the stage of growth, while reducing the dilution effect of fund-raising are done.

This financing scheme that combines the principles of conventional bank credit and ventures loan companies is the first in Indonesia.

Read the full article in Bahasa here.

An article written by Kontan.com. Read the full article here.

The period of the COVID-19 pandemic can be referred to as natural selection for business people, both large and small, including start-ups. The start-up business is considered to be one of the industries that quickly adapts and survives the pandemic.

To be able to continue to grow and accelerate business development, start-up companies need support, including in the form of financing. One of the banks that plays an active role in start-up financing is PT Bank CIMB Niaga Tbk (CIMB Niaga).

In 2019, the second largest national private bank in Indonesia began collaborating with a leading venture debt company in Southeast Asia, Genesis Alternative Ventures (Genesis) in channelling financing to start-up companies in the country with a total commitment of Rp. 300 billion.

CIMB Niaga Head of Commercial Banking Widodo Suryadi is optimistic that the start-up industry will play a significant role in supporting the Indonesian economy, especially in the current challenging conditions.

“We hope that the funding commitment we have prepared together with Genesis can be an alternative source of funding for potential start-up companies that have not met the criteria for conventional bank loans,” said Widodo.

Up to this point, the synergy between CIMB Niaga and Genesis has funded GoWork, a leading premium coworking space provider and Tanihub, an agriculture technology company.

Genesis co-founder and Managing Partner Dr. Jeremy Loh said he was very happy to have the trust of CIMB Niaga as a bank partner who wants to provide venture loans widely for potential start-ups in Indonesia.

Read the full article in Bahasa here.

The Co-Working Story Pre-COVID

Looking at pre-COVID statistics of the co-working sector is important in understanding its growth potential post-COVID. In a research report published in September 2019, Colliers International shared that flexible workspaces, comprising co-working spaces and serviced offices, had risen in prominence in recent years to become a mainstream real estate asset class globally. The number of co-working spaces globally had grown by a staggering compound annual growth rate of 121% between 2005 and 2018.

In Asia, as of Q1 2020, flexible workspaces had already accounted for more than 3% of net lettable area (NLA) in most markets compared to less than 2% in 2017.

Source: Colliers International Flexible Workspace 2020 APAC

Singapore represented the most mature co-working market in SE Asia. Singapore’s flexible workspaces accounted for 3.7 million sq ft of NLA of commercial space island-wide in 2018 – more than treble the 1.2 million sq ft available in 2015.

The Lockdown Begins

COVID-driven lockdowns started the world’s biggest work-from-home (WFH) experiment in early 2020. Armed with WiFi and a computer, the majority of office workers took to WFH with ease. It was clear that WFH offered a credible option – no time wasted commuting, increased productivity, no need to secure the large office long-term lease with high rental component. At the time, it was fair to also question the continued relevance of co-working spaces given WFH arrangements and social distancing.

Genesis’ portfolio company GoWork, Indonesia’s premier co-working space operator, had just turned EBITDA positive in December 2019. Expansion plans had to be frozen and the company acted swiftly to refine its operating SOP in order to cope with the new normal. Go-Rework (the parent company of GoWork) adapted quickly to mandated occupancy reduction, customers’ calls for split operations, social distancing, health checks etc. Taking a long-term view of the market, Go-Rework doubled efforts to sign-up enterprise clients that now required decentralized office spaces, and further leveraged their multilocation footprint in Jakarta allowing enterprises to split their teams across various GoWork locations for business continuity planning (BCP) purposes.

Key Observations Of Co-Working Spaces Globally During Covid

Demand from corporates is the biggest expansion driver – co-working is now a business solution, not just a real estate alternative.
Property developers are making co-working spaces a staple: for real estate owners, the presence of a co-working space in an office building or retail mall with 200-300 members has plenty of positive knock-on effects for retail and F&B in the same location.
Corporates increasingly use co-working spaces to house innovation teams. A deliberate strategy to locate innovation teams in a startup-like environment to promote independence and decentralised thinking.
Southeast Asia is a key battleground for dominance amongst operators with consolidation gaining momentum
Scale is important. Go-Rework itself, is the product of a merger between GoWork and ReWork in 2018. It is now the lead premium co-working space operator in Indonesia.

Looking ahead to 2021

Surveys have shown that extended WFH is not sustainable. A majority of employees (and employers) prefer a conducive office environment as it allows for greater focus and productivity, team collaboration, and human connection. In fact, Go-Rework has already reported a rebound to pre-COVID demand and revenues. Thus, while COVID has slowed the growth of co-working in the early phases of the pandemic, it has since proven to be a silver lining. It is expected that co-working spaces will play a key role as the traditional office model continues to get disrupted.

For the foreseeable future, corporates are expected to operate on a hybrid WFH /WFO model and co-working spaces are expected to be central to this evolution.

Source: JLL Human Performance Survey, May 2020

2020 has been a bear market for human folk. But on the other side of the fence, 2020 has also accelerated years of change in the way companies in all sectors and regions do business. Digital adoption has taken a quantum leap at both the organisational and industry levels.

When Sequoia Capital sent out the feared Black Swan warning in March 2020, the entire venture community took serious notice of what may lie ahead. Venture funds paused new investments in April and May 2020, and refocused on their portfolio companies. Companies of all sizes were impacted, and across the board, cost reductions were implemented in anticipation of a prolonged winter.

Billions of government stimulus dollars temporarily replaced venture dollars to ensure that all companies, including VC-backed ones, will survive the harsh(est) winter.

As the pandemic unfolded and the world became more isolated, turbulent times would seem to benefit technology companies, especially companies focused on the digital world. Adoption of cloud technology was ubiquitous. Zoom became a verb. It was no longer taboo to meet online versus having a coffee offline.

On the back of this, venture capital funds achieved record fundraising levels in 2020 amidst challenging new-normal conditions. Venture capital funds in the U.S. raised a record $69 billion in 2020, edging past a 2018 record and defying the odds amid a pandemic-rattled economy.

Southeast Asia VCs also kept a brisk pace: Sequoia India announced in July 2020 a fresh commitment of $1.35 billion in two new India/Southeast Asia funds – one is a $525 million venture fund and the other a $825 million growth fund. Vertex Ventures completed the final close of its Southeast Asia and India fund at $305 million. B Capital also sealed its $820 million second global fund targeted for B2B growth stage investments. Openspace Ventures completed a first close of its $200m Fund III. East Ventures announced the first close of its $88 million Fund VIII specifically designed for digital companies emerging in the post-lockdown aftermath of the Covid-19 pandemic. These funds will be hunting for exciting deals across Southeast Asia over the next 24 to 36 months, which will clearly pave the way for venture debt providers.

After a quiet March to May, resilience in venture investments was seen in the second half 2020 with $76.4 billion in venture funding worldwide. This represented an increase of 1% quarter over quarter and 9% year over year. The bulk of this funding went to growth-stage companies where rounds above $100 million accounted for 61% of funding. Angel and early investments were down as VCs sought to accelerate the growth of their existing portfolio companies and those nearer an IPO event.

In Southeast Asia, start-ups raised $5.6 billion in the first half of 2020, with most of these funds going to Series B and C rounds. While statistics for the final two quarters are not out yet, we expect numbers to be on par with previous years (if not better).

One of the contributory factors seems to be a flurry of exits via IPO. The red-hot technology IPO market saw big-name companies like Palantir, Asana and Snowflake, Airbnb and Doordash all making it to the gong. Airbnb garnered an enviable $86.5 billion valuation surpassing that of Marriot and Hilton combined. Zoom went from a $1 billion valuation to $116 billion in less than two years. Indonesia’s unicorn Tokopedia has announced its dual listing plan – domestic and US – to raise funding of $1 billion. This will certainly excite the entrepreneur community in Southeast Asia where the typical exit for a young company has traditionally been via the M&A route.

Heading into 2021, there is an even greater air of optimism that seems to be shaping the industry. We expect to see more healthcare companies funded, with Biotech and Pharma deals leading the charge. Digital transformation will continue to play a huge role in corporate development but also at the country level in moving the general population paper-less.

Fintechs in their respective silos, be it payment, remittance, advisory, will start to take shape and may see consolidation as digital banks emerge. We haven’t even talked about SPACs (Special Purpose Acquisition Vehicles) which may have an important part to play in the maturing ecosystem.

Most critically, from a purely venture debt perspective, PitchBook’s 2021 Venture Capital Outlook forecasts that venture debt in the US will continue a string of record years, surpassing 2,600 deals and $25 billion originated for the 4th consecutive year. This is a strong indication for Southeast Asia.

Given these meaningful developments, headwinds notwithstanding, Genesis believes that the broader tech ecosystem is certainly maturing in Southeast Asia, albeit more clearly in Singapore and Indonesia, the region’s current incumbents. In fact, we have observed that the result of the (unfortunate) pandemic, coupled with concerns regarding sustainability from the WeWork collapse, has reorientated entrepreneurs in Southeast Asia towards prudence and sustainable growth.

Genesis is in a strong position to continue its market leadership in the venture lending space in Southeast Asia and will look to capitalise on the strong funding wave that we expect in 2021/22.

Investor confidence is on the rise in Southeast Asia. Statistics indicate that VCs are again allocating additional resources and hunting for deals. According to a South China Morning Post (SCMP) report published recently, COVID-19 is unlikely to be a damper for Southeast Asian PE and VC firms which are flush with US$8.7 billion in unspent cash. However, the shift will come in the form of investing in later rounds where investors are expected to double down on their winning bets. This bodes well for venture debt and growth capital funding although this might be impacted by the recurrence of Covid infection waves around the world. Similarly, we observe various companies within the Genesis portfolio looking to raise additional capital to accelerate growth brought about by COVID-19 while putting in place bigger cash buffers. We expect to announce successful follow-on fund-raises of several of our portfolio companies in the next quarter.

Good companies get funded

COVID-19 has exposed how tenuous and fragile some business models are. In the first half of 2020, several notable start-ups such as iFlix (Malaysia), Sorabel (Indonesia), and Stoqo (Indonesia) ceased operations after struggling to raise additional capital. The demise of these companies may not be entirely attributed to the pandemic given that the business models and unit economics of such companies always pushed the boundaries of sustainability.

For example, some companies have consistently been struggling with managing a cash runway. Sorabel publicly declared that it has never had more than 6 months of cash since 2016; while others have seen a sharp decline in income as the pandemic barrelled across Asia.

Conversely, companies that are able to deliver growth continue to attract strong funding. NinjaVan added US$279 million new funding to scale E-commerce delivery logistics and boost B2B service. Waresix says it has closed its series B funding round, raising about US$100 million over the last year.

Payfazz is one of several tech start-ups focused on solving that problem by finding innovative ways to give more Indonesians access to financial services. The company announced that it raised a $53 million Series B led by B Capital and Insignia Ventures Partners. Taiger, a Singapore-backed artificial intelligence (AI) start-up whose clients include Bank of America, AIA Group and Banco Santander, has raised US$25 million of funding for its expansion.

Acquisition of start-ups by corporates accelerate

In the first 9 months of 2020, Southeast Asia has witnessed a flurry of acquisitions. TradeGecko was acquired by Intuit for US$80m, Synagie for US$62m by Gobi and Alibaba and Chilido for US$18m by Thailand’s CP Group. Mature start-ups like Grab and GoJek are also using consolidation as a strategy to expand into new services by acquiring smaller players. Rather than developing internally, they choose to leapfrog the cycle by buying existing companies that have been operating in the same or adjacent sectors. Gojek has acquired 13 start-ups thus far according to Crunchbase, including Vietnamese payments startup WePay and Indonesian point-of-sale platform Moka earlier this year. Grab and Traveloka have also been busy buying and integrating smaller players.

A harbinger of things to come? We certainly think so as private exits like these fuel the serial entrepreneurship cycle as well as offer an alternate exit channel apart from IPOs.

An article written by The Edge Singapore. Read the full article here.

With no lack of investors, venture capital firms, incubators and accelerators are seeking new ways to attract the next billion-dollar start-up.

For countries like Singapore aspiring to be the next start-up hub, the government must create a network of related innovation campuses and open its doors to global talent even as it provides tax incentives and cash grants.

But most importantly, start-ups need venture capital (VC) firms, incubators and accelerators willing to risk their time, effort and money to mentor and fund them during the development and commercialisation phases.

It therefore comes as no surprise that a large number of VC firms have set up shop in Singapore, all convinced they can find the next unicorn or start-up valued at over US$1 billion ($1.4 billion) to nurture.

But as the pool of high net worth individuals, VC firms and institutional investors expand, so do their need to innovate and create new investment strategies to differentiate themselves from the others and attract the most promising start-ups.

One example is Genesis Alternative Ventures, which calls itself Southeast Asia’s first private venture debt fund. Rather than going via the usual cash-for-equity route, it invests in a start-up’s debt. Simply put, Genesis provides the start-up with loans of about 20% to 30% of the equity funds it is able to raise. This loan will last for a term of three years and have less stringent loan approval requirements than banks.

Read the full article here.

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Genesis Alternative Ventures closes Southeast Asia’s first venture debt fund at US$80 million

Genesis Alternative Ventures closes Southeast Asia’s first venture debt fund at US$80 million

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Capital idea: the rise of venture debt

RateS bags Series A funding led by Vertex and Genesis Alternative Ventures

CIMB Niaga-Genesis Offers Funds of Up to IDR 300 Billion for Start-Ups

CIMB Niaga and Genesis Provide Funding for Indonesian Start-Ups

Co-Working Post Covid-19

Resilience in a Socially-Distanced Venture Capital Industry

Venture Industry Seeing A V-Shape Recovery

Raising the next unicorn, uniquely