More Southeast Asian startup founders to tap venture debt, according to INSEAD and Genesis Alternative Ventures survey 

• More than 60% of founders would consider using venture debt to raise up to US$5 million each for Series A and B funding
• Venture capital firms support venture debt and would recommend portfolio companies to use venture debt

Singapore, 28 December 2022 – More than 60% of Southeast Asian startup founders would consider using venture debt to raise up to US$5 million each, according to a survey by the INSEAD Global Private Equity Initiative (GPEI) and Genesis Alternative Ventures.

Founders would tap venture debt for Series A and Series B funding and would also prefer to raise from specialised venture debt lenders in order to access their networks and future rounds of funding, as well as for their help in building a credit track record.

The latest INSEAD GPEI and Genesis survey found that almost all startup founders polled had heard of venture debt, but only 27% have used it. Most of the venture capital (VC) firms surveyed, however, have recommended venture debt to their portfolio companies in the past two years and will continue to do so. About 82% of VC firms’ portfolios have used venture debt, and going forward most of the VC firms surveyed would recommend venture debt to their portfolio companies.

On the investor side, the study found that in the current environment of rising interest rates, investors prefer the yield and risk profile of venture debt.

The respondents were mainly from enterprisetech, healthtech and fintech companies in Southeast Asia.

The survey covered a total of 94 VC firms, startup founders and investors, and was carried out between 8 July to 1 August 2022.

The findings come as more startups in Southeast Asia have turned to debt financing given declining valuations. They have closed at least 15 financing deals totalling US$819 million in the third quarter of 2022, or just over half of the debt raised since the start of 2022.

Vikas Aggarwal, Academic Director of the INSEAD Global Private Equity Initiative and Associate Professor of Entrepreneurship and Family Enterprise at INSEAD, said: “Venture debt plays a critical role in the ecosystem of entrepreneurial finance, and has become increasingly important to startups in Southeast Asia in recent years.”

Dr Jeremy Loh, Co-Founder and Managing Partner of Genesis Alternative Ventures, said: “Our latest survey with INSEAD offers hope that startup founders will continue to view venture debt as a useful and necessary source of funding, complimentary to venture equity.

Genesis was founded by Mr Ben J Benjamin, Dr Jeremy Loh and Mr Martin Tang in 2019, to support early-stage growth companies in scaling up while minimising dilution in founders’ shareholdings.

The report of the survey can be downloaded here.

About INSEAD, The Business School for the World 

As one of the world’s leading and largest graduate business schools, INSEAD brings together people, cultures and ideas to develop responsible leaders who transform business and society. Our research, teaching and partnerships reflect this global perspective and cultural diversity.

With locations in Europe (France), Asia (Singapore), the Middle East (Abu Dhabi) and now North America (San Francisco), INSEAD’s business education and research spans four regions. Our 165 renowned Faculty members from 42 countries inspire more than 1,500 degree participants annually in our Master in Management, MBA, Global Executive MBA, Specialised Master’s degrees (Executive Master in Finance and Executive Master in Change) and PhD programmes. In addition, more than 11,000 executives participate in INSEAD Executive Education programmes each year. 

For more information, visit www.insead.edu.

About INSEAD Global Private Equity Initiative (GPEI)

The Global Private Equity Initiative (GPEI) is INSEADʼs private capital think tank which works hand-in-hand with private equity and venture capital firms, institutional investors and governments around the world to foster entrepreneurial ecosystems. It connects companies and entrepreneurs with the right sources of capital for their stage of development. GPEI covers research topics ranging from early-stage venture capital to growth equity to buyouts of mature businesses. For more information, visit www.insead.edu/gpei.

About Genesis Alternative Ventures

Genesis Alternative Ventures is Southeast Asia’s leading private lender to venture and growth stage companies funded by tier-one VCs. Genesis is a trusted partner in empowering corporate growth while minimising shareholders’ equity dilution. Genesis is founded by a team of venture lending pioneers who have backed some of Southeast Asia’s best-loved companies. Genesis was founded by Ben J Benjamin, Dr Jeremy Loh and Martin Tang in 2019. 

For more information, visit www.genesisventures.co.

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Catherine Ong Associates

Catherine Ong

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• Strong investor support with almost half the Fund committed at first close.
• 80% of first close commitments from existing investors such as Sassoon Investment Corp, Aozora Bank, Korea Development Bank, Mizuho Leasing, Silverhorn; notable new investment from Israel’s OurCrowd.
• Genesis’ US$90m Fund I launched in 2019 financed 25 companies across Southeast Asia including unicorns Matterport & Akulaku.

Singapore, 25 August 2022 – Following the success of its debut US$90 million fund in 2019, Genesis Alternative Ventures has launched its second venture debt fund to raise US$150 million to finance start-ups across Southeast Asia. Almost half the fund  was raised at first close earlier this month.  

In a strong show of support, 80% of Fund II’s first close commitments came  from existing Genesis’ Limited Partners (LPs) such as Sassoon Investment Corp,  Aozora Bank, Korea Development Bank, Mizuho Leasing, Silverhorn, family offices, charitable trusts, fund of funds and corporate investors. Among new investors is OurCrowd, the Israel-based online global venture investing platform.  

Dr Jeremy Loh, Genesis’ Co-Founder and Managing Partner, said: “We are grateful to our investors for their continued support.

Genesis Fund II further strengthens our ability to provide financing for promising start-ups that are catalysts for economic growth in the region.” 

Genesis extends debt to revenue-generating, high-growth companies that are backed by venture capital funds. These start-ups typically do not qualify for regular bank loans because they lack collateral, or have not yet reached profitability, and/or their founders are wary of taking on too much venture capital for fear of diluting their ownership. 

The venture debt firm founded by Ben J Benjamin, Dr Jeremy Loh and Martin Tang in 2019, will continue to focus on Southeast Asia’s early and mid-stage high growth technology start-ups (Series B to pre-IPO). Dr Loh said Fund II already has a US$60 million deal pipeline in place. 

He added: “Southeast Asia remains a magnet for investors attracted by the region’s growth potential, talent availability, high population and reasonable labour costs. In particular, Singapore has strengthened its position as a hub for innovative start-ups in the region. 

“While the pace of investing may have slowed due to economic headwinds, interest in Southeast Asia technology companies remains strong. Given the record amount raised by venture capital funds in the last year, there’s a lot of dry powder for start-ups with strong fundamentals.  

“Genesis will continue to finance first-class entrepreneurs who are building high-growth companies built on sustainable business models.” 

Impact & ESG forms backbone of Fund I portfolio

Genesis Fund I raised an oversubscribed US$90 million and has financed 25 companies from Series A to pre-IPO in sectors such as logistics-tech, fintech, agritech, cybersecurity, and food-tech operating in Southeast Asia. It counts two unicorns among its portfolio companies namely Matterport, a leading global spatial data platform company, and Akulaku, a banking and digital finance platform in Southeast  Asia. 

Genesis selectively finances companies with meaningful impact objectives and works closely with entrepreneurs to identify and introduce important ESG principles within portfolio companies. Genesis has channelled nearly half of its capital from its debut fund into start-ups with meaningful impact objectives that are aligned with the United Nation’s Sustainable Development Goals. Close to 80% of its portfolio companies have in place formal ESG policies and procedures. 

In a joint report last year, Genesis and PwC Singapore noted that venture debt is fast emerging in Southeast Asia as an alternative and complementary source of  financing for high-growth tech companies that traditionally only raised equity as a source of capital. The report was presented at last year’s Genesis Forum featuring Tan Sri Mohamed Nazir bin Abdul Razak, past Chairman, CIMB Group, who delivered  the keynote address “Profit with purpose, my personal journey to here.” 

Victor Sassoon, Chairman, Sassoon Investment Corporation: “We are delighted to continue backing the Genesis team in their mission to provide less-dilutive funding to entrepreneurs across Southeast Asia. We are firm believers that venture debt will play an important role for start-up founders who are confident of their business growth and recognise the long-term value in complementary financing for working capital and other needs.”

Shin Kato, Head of Asia Investment Group, Aozora Bank: “The Southeast Asian and the Japanese venture ecosystems have long been underserved by credit providers. Genesis and Aozora Bank are both tackling this issue in their respective markets, and we are happy to continue our strategic partnership with Genesis to provide non-dilutive capital to innovative and impactful companies through their second fund while exchanging know-how and market insights on Japan and Southeast  Asia.” 

Jon Medved, CEO, OurCrowd: “We are delighted to be investors in Genesis Fund II. This fund has a tremendous management team whom we have known for  years, leading co-investors, superb performance to date, and a brilliant future in bringing the important asset class of venture debt to the fast-growing Southeast Asia market. When we add the power of our global OurCrowd community to Genesis’ already great story, we are confident that this is about to get only better.” 

About Genesis Alternative Ventures 

Genesis Alternative Ventures is Southeast Asia’s leading private lender to venture and growth stage companies funded by tier-one VCs. Genesis is founded by a team of venture lending pioneers who have backed some of Southeast Asia’s best loved companies. Armed with a strong reputation among entrepreneurs and investors, Genesis is a trusted partner in empowering corporate growth while minimising  shareholders’ equity dilution. Genesis was founded by Ben J Benjamin, Dr Jeremy  Loh and Martin Tang in 2019.

For media queries, please contact: 

Catherine Ong Associates

Catherine Ong

Mobile: (65) 9697 0007

Email: cath@catherineong.com

Joel Ng

Mobile: (65) 9873 5728

Email: joel@catherineong.com