Genesis Alternative Ventures has launched a venture debt business targeting Southeast Asia startups.
It is an untapped market that has the potential to run into billions of dollars, one of its founders told FinanceAsia last Friday.
Last year, there was a record $11 billion invested in the equity of technology companies in Southeast Asia, according to research firm KrAsia. This is almost double the $5.8 billion invested in 2017.
“I hope venture debt can take about 2% of such venture equity investment,” Jeremy Loh, co-founder of Genesis, told FinanceAsia by phone. “And this proportion will grow to 10% in the long run in Southeast Asia.”
Genesis Alternative Ventures, which is backed by the Sassoon family office and partners with Indonesian PT Bank CIMB Niaga, declined to disclose how big the new fund will be.
But reports suggest that the Singapore-based company plans to raise $70 million over the coming 12 months.
Loh hopes venture debt will complement growth-stage equity investment in the region's booming startup scene. In that, he takes his cue from the US, citing the success of Silicon Valley Bank and Hercules Capital, which last year made a total $12 billion of venture loans.
“We focus on the vertical space of some mature and fast-growing sectors in Southeast Asia,” Loh said. “Most of our lending projects are in their Series B rounds.”
Genesis is so far providing support to three companies, including Singapore-based Horangi Cyber Security, online restaurant Grain, and Indonesian workspace provider GoWork.
But with so few other independent firms in the venture debt space, it is optimistic about the potential to expand its portfolio.
“We see a robust pipeline of companies coming through and we believe that entrepreneurs value the need for a judicious balance of debt and equity to fund their expansion,” he said, citing offline retail companies and social media-promoted e-commerce sites among the businesses it likes.
The source of Genesis’s funding so far comes from sovereign wealth fund and banks in the region, Loh said, without providing further details. He added that investors from Europe and South Korea had also expressed their interest in the fund.
