Singapore's Genesis closes $80m venture debt fund

The Sassoon family is the anchor investor, and about 75% of the total corpus has come from financial institutions, fund-of-funds, and family offices. Other LPs include Korea Development Bank, Aozora Bank, Silverhorn Group, Bank CIMB Niaga, and US-based Capria Ventures, which is expected to support Genesis’ profit-for-purpose mandate through its expertise in impact investment.

It extends a groundswell of venture debt activity in the region, including Japan’s MUFG Bank setting up a Singapore-based venture debt unit alongside Israeli fintech start-up Liquidity Capital. Last month, Malaysia Debt Ventures teamed up with Kenanga Investment Bank, Malaysia largest independent bank, to launch a fintech-focused fund.

“Venture debt in Southeast Asia has been thrust into the limelight during the COVID-19 period with entrepreneurs seeking more efficient capital and putting in place additional capital buffers,” Jeremy Loh, a co-founder and managing partner at Genesis, said in a statement. Genesis estimates that venture debt deal flow is growing 31% per quarter on an annualized basis, albeit from a low base.

In Southeast Asia, venture debt still represents less than 5% of overall venture funding, compared to 15% in the US. However, the funding – generally deployed by way of secured non-convertible debenture with equity options – is considered a good fit for ASEAN entrepreneurs who often lack the track record to secure traditional bank loans and prefer to minimize equity dilution.

Much of the asset class’ regional traction can be traced back to the establishment of Genesis in 2018. Loh and Martin Tang, both formerly of the venture debt unit of DBS Bank, set up the firm alongside Ben Benjamin, previously an angel investor at OurCrowd Singapore, with a view to targeting Southeast Asian companies at the Series B stage mostly with loans of less than $5 million.

Genesis has deployed $30 million across 12 VC-backed companies to date. Standouts include cybersecurity supplier Horangi, IT services platform Lynk Global, and co-working players GoWork and Hmlet. Matterport, a real estate tech provider that facilitates virtual property tours, listed on NASDAQ in February via a special purpose acquisitions company.

Previous activity in this space includes Enterprise Singapore launching a venture debt program in 2016 with support from DBS, United Overseas Bank, and OCBC Bank. There has also been interest from outside the region, with US-based Partners for Growth striking its first Indonesian venture debt deal in 2019, offering a $20 million credit line to digital credit start-up Kredivo.

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• Topics
• Southeast Asia
• Fundraising
• Credit/Special Situations
• Singapore
• Structured finance
• venture debt