Raising the next unicorn, uniquely

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.