Genesis

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.

In a tech ecosystem affected by an uncertain environment, could venture debt be a white knight to save startups in Southeast Asia?

Venture debt, a type of financing typically used by early-stage companies and startups, first gained prominence in Southeast Asia around 2015. In the US, however, it has long been a fixture on the market, with 35-year old industry pioneer Silicon Valley Bank (SVB) backing around 50% of venture-capital-backed companies with IPOs in 2017.

Venture debt brings significant benefit as a complementary form of financing as capital that is almost equivalent to equity without dilution. For small and medium enterprises (SMEs), debt capital can also bring an optimum cost of capital.
– Jeremy Loh, Co-founder and managing partner at Genesis Alternative Ventures

General financing parameters in venture debt have not changed much, despite recent variability in demand and market conditions in wake of COVID-19, according to Loh. Genesis Alternative Ventures typically funds between USD 1 to USD 5 million dollars, while Innoven Capital typically carries out a 20% funding round with loan durations typically among two to three years long, similar to pre-COVID financing structures.

Both venture debt providers emphasized that their general funding structure and terms remain sensitive to the company’s purpose. In addition, bespoke conditions may be offered to tailor to each company’s circumstances.

Yet, despite the arguably increasing popularity of venture debt in Southeast Asia, it is yet too early to conclude that this will become a mainstream form of financing for startups, even with COVID-19 as an accelerator of change, and promising venture debt providers like Innoven Capital and Genesis Alternative Ventures in play

Read the full article here:

https://kr-asia.com/will-venture-debt-be-a-white-knight-for-startups-in-southeast-asia

When start-ups accept money from venture capitalists, the founders are often asked to give up a significant portion of their ownership in return for additional equity financing. Venture debt funding is an alternative way for start-ups to raise funds, minus the equity dilution.

When you have to sell equity in your company to raise money to buy, for example, depreciating assets, it is an expensive exercise.
-Ben Benjamin, Co-founder and partner of Genesis Alternative Ventures

The venture debt business model also benefits the venture fund as it brings about at least two streams of income. The first is the interest payable on the loan from the borrower, and the other is warrants. But why would a start-up turn to a venture-debt fund instead of a bank for a loan?

Banks have more stringent requirements and criteria when approving loans to companies. The banks typically want some semblance of earnings before they are willing to lend. The very nature of start-ups is often prioritising growth over profitability, which unchecks this box right away. This is where Genesis comes in.

Read the full article from The Edge Singapore here.

Entrepreneur Peggy Choi On The Struggles She Faced Building Knowledge Sharing Platform, Lynk Global

Peggy Choi learnt what resilience was at 14, when she had major spinal surgery and was hospitalised for two months. Fast-forward, now she’s jumped into the world of entrepreneurship, faced-off gender stereotypes and proved countless investors wrong with the creation of her startup, Lynk Global—a knowledge sharing platform used across the globe.

Full Generationt Asia article (3 March 2021)

Matterport to Go Public Via Alec Gores SPAC in $2.9 Billion Deal

Matterport Inc., a maker of software for virtual walk-throughs of properties, agreed to go public through a merger with a blank-check company backed by billionaire Alec Gores.

Full Bloomberg article (8 February 2021)

Lynk, a “knowledge-as-a-service” platform with more than 840,000 experts, raises $24 million

Lynk, a “knowledge-as-a-service” platform that connects clients with over 840,000 experts in a wide range of fields, announced today it has raised $24 million led by Brewer Lane Ventures and MassMutual Ventures, with participation from Alibaba Entrepreneurs Fund.

Full Tech Crunch article (27 January 2020)

Global Real Estate Brands Adopt Matterport Capture Services to Accelerate Property Sales and Tenancy

Matterport today announced Matterport Capture Services™, a fully managed solution for enterprise customers to book 3D virtual tours with Matterport Capture Technicians™ skilled in using the Matterport Pro 2 camera.

Full Matterport article (1 July 2020)

Horangi Cyber Security Named In Gartner 2020 Market Guide for Compliance Automation Tools in DevOps

Horangi Cyber Security is a CREST-accredited SaaS company based in Singapore. Horangi Cyber Security, its product Warden, has been listed as a Representative Vendor in the Compliance Automation Tools in DevOps Vendors in Market Guide for Compliance Automation Tools in DevOps.

Full Horangi Cyber Security article (1 July 2020)

Jeremy Loh, co-founder and managing partner at Genesis Alternative Ventures, talks about the opportunities in venture debt, which involves lending money to early-stage firms and minimizes the dilution of a founder’s stake. Loh speaks with Haslinda Amin and Rishaad Salamat on “Bloomberg Markets: Asia.

(Source: Bloomberg)

Working-Living-Shopping-What-it-will-look-like-with-COVID-19.png

Welcome back to our webinar series, #GENZOOMS. In this episode, we will share stories about how our behaviours have changed from ‘Life after COVID’ to ‘Life with COVID’. So how does that change how we live, work, and shop, especially with the gradual re-opening of economies? Will e-Commerce spell the demise of retail? Will WFH mean that CoWorking spaces are irrelevant? What will CoLiving mean when there is social distancing?

Our host Martin Tang invited three panellists to dig more insights and stories about the situation.

Irwan Mussry, President and CEO of Time International
Vanessa Hendriadi, CEO and Co-Founder of GoWork
Sagar Khatri, VP and Corporate Development of Hmlet

There’s a good insight from Irwan Mussry where he stated that the e-Commerce and the brick and mortar should go hand in hand. And at the same time, Vanessa said that the flexible work arrangement is definitely here to stay.

Watch the full stories in the video below.

Watch the first episode of #GENZOOMS here: link

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We are very delighted to have our second episode of #GENZOOMS webinar series. In the past months we’ve noticed a lot of startups continue to raise money, despite the gloomy business outlook that accompanies the coronavirus. Are they lucky? Or did they simply have a well-executed fundraising plan?

Our host Martin Tang invited four panellists to uncover the secrets and get their insights and stories about the situation.

Steve Melhuish, Venture Partner of Wavemaker Partners
Junxian Lee, Co Founder of Moovaz
Kristin Lim, Director and Investments of Fundnel
Velisarios Kattoulas, CEO of Lanturn

Junxian Lee emphasised one of the important things is steadying the ship, and still being able to confident about the business model, and identified the areas that we need to tweak moving forward. That is helpful in giving investors’ confidence.

Discover the full stories in the video below.

Watch the third episode of #GENZOOMS here: link

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The PDF version of this media release can be downloaded here

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Global Investor Capria Fund invests in Singapore’s

Genesis Alternative Ventures

Seattle-based Capria makes first investment in Southeast Asia through venture debt asset class
Genesis to tap growing opportunities in impact investing amid strong growth in venture lending

Singapore, 11 June 2020 – Genesis Alternative Ventures Fund I, Southeast Asia’s first private venture debt fund, today welcomes a strategic investor – Capria, a Seattle- based global investment fund that invests in venture equity and innovative debt fund managers that deliver superior returns and impact at scale.here

Genesis will leverage Capria’s expertise in impact investing to identify and provide venture financing to companies with meaningful impact objectives such as financial inclusion, sustainable food production, small business digitisation, gender diversity, etc., as they scale across Southeast Asia.

Genesis is Capria’s first investment in Southeast Asia and its first investment in a venture debt fund.

Capria counts International Finance Corporation (IFC), Ford Foundation, Vulcan Capital, Omidyar Network, Sorenson Impact Foundation, among others as its investors. Capria also joins a growing list of blue-chip investors in Singapore-based Genesis, which includes Sassoon Investment Corporation (SassCorp), family office of entrepreneur Victor Sassoon, and other notable corporates, family offices and high net worth individuals across Asia, Europe and the US. CIMB Niaga, a leading bank in Indonesia, became a strategic partner in Indonesia last year with a US$10 million commitment to Genesis to fund fast-growth tech companies in that country.

Dr. Jeremy Loh, Co-Founder and Managing Partner at Genesis Alternative Ventures, said: “We are delighted to welcome Capria as a strategic investor at a time where a liquidity gap exists for venture-backed companies looking to raise funds. In recent months, Genesis has seen a 30% increase in deal flows from high quality companies and founders. We are poised to make another five to six investments in the coming months which will double our portfolio size.”

Delivering Superior Returns and Scaled Impact

Capria specialises in investing in private funds and companies in underinvested emerging markets. These companies deliver essential goods and services to local consumers and small businesses leveraging technology and business model innovation in sectors such as financial services, healthcare, ag/food, logistics, and education.

Dave Richards, Co-Founder and Managing Partner at Capria, said: “The idea of investing for superior financial returns coupled with sustainable impact is catching on in Southeast Asia and Capria is proud to partner with Genesis to further this wave.

“Until recently, ‘impact investing’ was very nascent and mostly associated with concessionary financial returns in Southeast Asia. This has started to change with more leading funds implementing impact strategies to tap into underinvested sectors and companies.”

As part of Capria’s investment, Genesis will also join Capria Network, the largest network of emerging market fund managers collaborating to deliver superior returns and scaled impact.

Genesis Team are Venture Debt Pioneers in Southeast Asia

Genesis was founded by Ben J Benjamin, Dr Jeremy Loh and Martin Tang in 2019 to help tech enabled companies accelerate their growth while minimising equity dilution. Dr Loh and Mr Tang have extensive experience in venture lending and equity investing, having spearheaded DBS Venture Growth Partners specialising in venture lending

from 2015 to 2018. Dr Loh also helmed the EDB Investment office in Silicon Valley from 2009 to 2014. Mr Benjamin is also non-executive director of OurCrowd Singapore, the Israel-based online venture capital platform.

Since inception, Genesis has built a high-quality portfolio of diversified and resilient investments including Horangi, GoWork, Hmlet, Matterport and Lynk Global, co- investing alongside leading global and regional venture capital firms.

Significant Venture Debt Opportunity across Southeast Asia

Venture debt has accelerated across Southeast Asia in recent years given the maturing of the tech and financing ecosystem. Global data suggests there is significant headroom for growth in the region. A recent study by Kruze Consulting shows that US venture debt grew 30% in 2019, accounting for 10% of total venture capital investments. By comparison, venture debt makes up between 1% and 3% of overall venture funding in Southeast Asia last year.

With its young, mobile-first population, Southeast Asia is poised to be one of the biggest beneficiaries of high growth companies delivering access to digital products and services following in the footsteps of breakout companies such as Gojek, Grab, Lazada, Property Guru, Razer, SEA, etc.

Prudent Investing in times of Crisis

The data shows that financial crises have historically proven to be a time of innovation and entrepreneurship. Over half of Fortune 500 companies were created during a recession or bear market, and over 50 of today’s tech unicorns, collectively valued at $145.2 billion, were founded during the 2007-2009 recession years, including WhatsApp, Uber, Slack, Square, Alibaba & JD.Com1. In Southeast Asia, many tech enabled companies such as Kopi Kenangan, NinjaVan, Nium, Tanihub, have continued to raise funds successfully in the first half of 2020, Covid-19 notwithstanding.

Ben J Benjamin, Co-Founder and Partner of Genesis Alternative Ventures, said: “Major crises lead to a whole range of challenges but they also create investment opportunities. Fleet-footed entrepreneurs are able to tap these opportunities to create meaningful products and services to be accessible during turbulent times.

“These entrepreneurs have found their Zoom moments and we want to be there to take them to the next stage of growth.”

– The End –

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 your trusted partner in empowering your company’s growth while minimising shareholders’ equity dilution.

About Capria

Capria Ventures is a global investment firm leading, partnering with and funding the largest network of emerging market fund managers collaborating to deliver superior returns and scaled impact. Capria brings venture capital innovation and global best practices to local venture capital, private equity and innovative debt funds, managed by local investment experts. Capria’s network of investing partners collectively manage more than USD $400 million in assets deployed in early stage and early growth companies in Latin America, Africa, and Asia. Capria has over $100M in AUM which it invests directly in India via Unitus Ventures, and in other markets via partners of the Capria Fund which takes anchor GP and LP positions. Capria has offices in Seattle, Bangalore and Nairobi. More at: http://capria.vc

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Global Investor Capria Fund invests in Singapore’s Genesis Alternative Ventures