Genesis

The PDF version of this media release can be downloaded here

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AI Fintech Trusting Social raises venture debt from Genesis Alternative Ventures

SINGAPORE, 29 April 2021 – Headquartered in Singapore and operating across Vietnam, Indonesia, India and the Philippines, AI Fintech Trusting Social announced an undisclosed venture debt financing with debt investor, Genesis Alternative Ventures. Trusting Social is backed by Sequoia Capital, Beenext, Tanglin Ventures and 500 Startups.

Trusting Social delivers AI-led products to leading banks and finance companies, enabling them to provide credit to under-served consumers at scale.

Today, Trusting Social’s credit insights cover more than a billion consumers and are used by more than 130 financial institutions across Vietnam, Indonesia, India and the Philippines. Trusting Social is now focused on bringing its broader suite of AI-driven products and services (a full stack of lead generation, credit insights, eKYC, digital onboarding and portfolio management) to market, and to enable 100 million credit lines.

The company has two business models – an Enterprise business that allows financial institutions to access its capabilities on a pay-per-use basis, and a Partnerships business, where it jointly creates and manages consumer credit portfolios with an FI partner, and shares in the net profits.

“We are tapping on venture debt to strengthen our balance sheet, diversify funding sources, and accelerate the company’s growth, especially in our Partnerships business,” said Founder and CEO Nguyen Nguyen, PhD. “Our ambition is to enable financial inclusion on an unprecedented scale, and Genesis will be helping us frame our reporting for this purpose.”

Singapore based Genesis Alternative Ventures recently announced the final close of its US$80 million fund. “The flow of credit is a key driver of economic growth,” said Eddy Ng, Head of Investments and Portfolio at Genesis. “We are excited to be supporting Trusting Social’s growth as they increase their breadth of product offering, helping banks and financial institutions to increase their reach to the under-served consumers.”

What is a SPAC?

A Special Purpose Acquisition Company (SPAC) makes no products and does not sell anything. In fact, the SPAC’s only assets are typically the money raised in its own IPO. Generally, a SPAC is formed by an experienced management team or a sponsor with nominal invested capital, typically translating into a ~20% interest in the SPAC (commonly known as founder shares). The remaining ~80% interest of the SPAC’s shares is held by public shareholders through “units” offered in an IPO.

Some well-known names in the SPAC industry include buyout specialist Alec Gores, venture capitalist Chamath Palihapitiya, and former Citigroup Inc. banker Michael Klein, while in Malaysia, internet entrepreneur Patrick Grove also filed for a $250 million SPAC.

A shareholder that prefers to exit prior to the initial business combination can sell its units in the market or choose to have its shares redeemed for its pro rata portion of cash from the IPO that is being held in the trust. At this stage, the SPAC typically does not have a target company to merge with.

In its IPO, a SPAC typically offers units, consisting of a share of common stock and a fraction of a warrant, at $10 per share.

The money raised then goes into an interest-bearing trust account until the SPAC’s founders or management team identifies a private company looking to go public through an acquisition.

From a SPAC to De-SPAC

The SPAC is required by its charter to complete that initial business combination — or “de-SPAC” transaction — typically within 24 months, or liquidate and return the gross proceeds raised in the IPO to the public shareholders.

Once an appropriate target company has been identified, the SPAC and the target undertake a merger, acquisition, or other transaction that results, in most cases, in the operating business becoming a publicly traded company that effectively “takes over” the public company status of the SPAC. As a result of this process, the SPAC is “De-SPAC” and continues its life as a public company.

The De-SPAC process is similar to a public company merger, except that the buyer (the SPAC) is typically required to obtain shareholder approval, which must be obtained in accordance with SEC proxy rules, while the target business (usually a private company) does not require an SEC-compliant proxy process.

Source: Harvard Law School Forum on Corporate Governance

Complementary PIPE Financings

A SPAC can seek a PIPE (private investment in public equity) deal if it needs to raise additional capital to close a merger transaction with a target company. A PIPE arrangement may become necessary where the cost of acquiring a target company exceeds the funds that a SPAC has in its trust account. For example, Singapore’s sovereign wealth investor GIC announced a $200 million PIPE into SPAC-backed View Inc. Tiger Global, along with others, will inject $295 million via a PIPE into the Matterport-Gores SPAC.

Besides providing capital, PIPE investors can also validate the valuation of the target company. Raising a PIPE is quite similar to a normal fundraising round where the PIPE investors will value the target. PIPEs prove that there is investor demand for the company at a certain price. Once the PIPE is closed and the SPAC merger announced, and if the PIPE is oversubscribed, investors who could not gain access during the PIPE would be able to purchase in the public markets instead. There are short-term arbitrage SPACs with investors who have no interest in actually owning the company being taken public.

SPACs in Asia

Asia’s representation in the global pie has been small so far – about 11 out of 2021’s 304 SPAC IPOs, and just US$4.7 billion in SPAC mergers. Given the region’s large pool of new-economy companies, bankers are now plugging it as a hot spot for merger targets.

It was reported that SoftBank-backed Grab will go public through a merger with a SPAC that could value the ride-hailing giant at nearly US$40 billion (S$53.6 billion). This would make the Grab SPAC the largest-ever, blank-cheque deal.

Singapore’s SGX is the first major Asian bourse to consider the listing of SPACs. The Exchange is proposing regulations to allow SPACs with a minimum market value of S$300 million (US$223 million). Hong Kong, Indonesia, and other markets are stepping up efforts for SPAC listings.

An article written by Tech In Asia. Read the full article here

Singapore-based private lender Genesis Alternative Ventures said it has closed its US$80 million debt fund for Southeast Asia, which it claims is the first venture debt fund in the region.

The company didn’t specify, however, if this was the first or final close of the fund.

Anchored by Singapore’s Sassoon family – a clan known for its retail dealings – other investors in Genesis Alternative Ventures Fund I include Japan’s Aozora Bank, Korea Development Bank, and Hong Kong multiasset investment firm Silverhorn Group. Earlier backers include Indonesia’s CIMB Niaga and Seattle-based global investment impact fund Capria 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,” said Genesis Alternative Ventures’ co-founder and managing partner, Jeremy Loh.

Read the full article here

The PDF version of this media release can be downloaded here

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Genesis Alternative Ventures closes Southeast Asia’s first venture debt fund at US$80 million

Total commitments from investors exceed target range
Institutional commitments include Aozora Bank, Korea Development Bank, PT Bank CIMB Niaga
Genesis deploys US$30 million to tech companies, seeks those with profit-for-purpose mission

Singapore, 15 April 2021 – Singapore-based Genesis Alternative Ventures has closed Southeast Asia’s first venture debt fund at US $80million, exceeding the top end of its target range.

Investors in Genesis Alternative Ventures Fund I, anchored by Singapore’s Sassoon family, include Japan’s Aozora Bank, Korea Development Bank (KDB) and Hong Kong multi-asset investment firm Silverhorn Group. Earlier commitments include Indonesia’s PT Bank CIMB Niaga and Seattle-based global investment impact fund Capria Fund.

Tokyo-based Aozora Bank is a publicly-listed financial institution that operates through 21 domestic and five overseas offices. As at 31 December 2020, it has total assets of about 5.6 trillion yen (US$51 billion). In November 2019, Aozora Bank established a two billion yen (US$18 million) fund to provide venture financing to domestic venture firms.

State-owned KDB is a policy development bank in South Korea with total assets exceeding US$230 billion. By collaborating with Genesis, KDB hopes to facilitate the expansion of Korean technology firms into Southeast Asia.

Overall, financial institutions, fund-of-funds and family offices accounted for about 75% of total commitments from investors across Asia, Europe, the Middle East and the United States.

Dr Jeremy Loh, Co-Founder and Managing Partner at Genesis Alternative Ventures, said: “Venture debt in Southeast Asia has been thrust into the limelight during the Covid period with entrepreneurs seeking more efficient capital and putting in place additional capital buffers.

“We are thankful for the strong support of our investors who have embraced the venture debt model in Southeast Asia. We are equally delighted with the robust quality of our portfolio companies. A growing number of them are making a positive impact to society and the environment, underscoring Genesis’ profit-for-purpose commitment.”

More than US$30 million of venture debt deployed to SE Asia tech companies

To date, Genesis has deployed over US$30 million to a growing portfolio of 12 venture-backed companies across Southeast Asia. They include Horangi Cyber Security, Indonesia’s flexible space provider GoWork, Lynk Global – an on-demand expert network platform as well as Believe, a B2B FMCG startup.

Another portfolio company, Matterport Inc, an expert in transforming buildings into digital spatial data, has announced in February 2021 that it has entered into a definitive agreement that will result in Matterport becoming a Nasdaq listed company via a SPAC.

Investing in for-profit companies that deliver impact at scale

Genesis is committed to investing in companies with the potential to generate sizeable financial returns while delivering sustainable positive impact.

Genesis counts Flow, Deliveree, Tanihub and Trusting Social among its impactful portfolio investments. The latter leverages AI and big data to enable financial inclusion for the underbanked, while Flow focuses on ethical, digital consumer debt collection in various Southeast Asian countries. Indonesia’s Tanihub gives fairer rates to Indonesian farmers, provides microloans for their crop and grows their businesses. Through its Driver Partner Benefits Program, Deliveree aims to generate better income through lowering the costs of maintaining their vehicles.

Growing importance of venture debt in Southeast Asia

Venture debt, generally deployed by way of senior, secured non-convertible debenture accompanied by equity options, is appropriate for emerging, high growth businesses that need to extend their cash runway to get to the next stage of growth. These companies may lack the track record to meet traditional criteria for bank loans or their founders may wish to minimise equity dilution.

Global data suggests there is significant headroom for venture debt to grow in the region. A recent study by Pitchbook notes that in the US, venture debt has grown at a faster pace than the broader venture capital market and that 2019 and 2020 were record years for tech companies raising debt. By comparison, venture debt makes up an estimated 2% to 4% of overall venture funding in Southeast Asia last year. While trailing US venture debt deployment, venture debt in Southeast Asia continues to gain traction as qualified deal flow continues to grow 31% quarter on quarter on an annualised basis since January 2020.*

*Internal Genesis statistics (2020 – 2021)

Genesis to host forum on venture debt and impact investing in May 2021

Genesis will host an online forum for industry leaders and thought leaders to share their experiences and exchange ideas on the venture ecosystem, specifically as it relates to capital raising, venture debt and impact investing.

The Genesis Forum, (http://www.genesisventures.co/forum2021), organised in collaboration with Institute of Innovation and Entrepreneurship at Singapore Management University (SMU) and PricewaterhouseCoopers Singapore (PwC Singapore), will take place on 6 May 2021. Dato’ Sri Nazir Razak, who is the Founding Partner and Chairman of Ikhlas Capital and former Chairman of CIMB Group, will deliver the keynote address. Genesis and PwC Singapore are also expected to release a first-ever industry-wide paper on venture debt in Southeast Asia at the forum.

Genesis was founded by Ben J Benjamin, Dr Jeremy Loh and Martin Tang in 2019.

– The End –

An article written by Venture Capital Journal. Read the full article here.

Venture debt is growing faster than traditional equity financing and faster than the wider VC market, according to a recent PitchBook report titled Venture Debt a Maturing Market in VC.

It thus “makes sense that the growth of venture debt has outpaced the broader VC market,” the report noted. “More companies receiving institutional venture backing equals more potential borrowers for lenders, in many ways making venture debt a dependent variable.”

The PitchBook report claimed venture debt has been split evenly between early and late-stage companies over the last decade in terms of financing count. ButPitchBook’s methodology treats convertible loans as venture debt, which is hugely popular in the early-stage.

“Recently, even seed-stage loans have caught up [to late stage], largely because of the increased use of convertible notes for these investments,” the report said.

Read the full article here.

An article written by Financier Worldwide. Read the full article here.

Amid the ongoing economic uncertainty emanating from the coronavirus (COVID-19) pandemic, an increasing number of capital-hungry companies are turning to venture debt as a relatively speedy way of accessing new funding.

Venture debt, as defined by the Corporate Finance Institute (CFI), is a type of debt financing obtained by both early and late-stage companies. It is typically used as a complementary method to venture equity financing and can be provided by both banks specialising in venture lending and non-bank lenders.

“Companies are operating in a very uncertain environment and businesses with solid fundamentals want to have an extra layer of a cash buffer to be able to steamroll ahead of their competition,” says Dr Jeremy Loh, co-founder and managing partner at Genesis Ventures. “Raising equity in this environment could mean a lower valuation that could hurt their next financing round ambition. An added advantage of venture debt comes in the form of bringing lenders that are sophisticated about innovative and disruptive new economy businesses into the capital stack and capitalisation table.”

Within the world of aspiring unicorns, entrepreneurs are optimistic about the use of venture debt, with many expecting the impact of COVID-19 on venture markets to lead to a permanent increase in the use of venture debt.

Read the full article here.

Indonesian social commerce platform RateS has closed a Series A round led by Vertex Ventures Southeast Asia & India, and venture debt firm Genesis Alternative Ventures.

An article written by Garage – Businesstimes.com.sg. Read the full article here.

The undisclosed funding will be used to accelerate RateS’ expansion in Indonesia’s underserved tier two and three retail markets via its reseller base of more than 500,000 agents.

Jake Goh, CEO and co-founder of RateS, said the company has seen resellers’ incomes increase by up to 50 per cent since joining its platform.

“As with many other models we have seen, e-commerce marketplaces in South-east Asia have long evolved into a race-to-the-bottom with cash serving as the only standing moat,” said Chua Joo Hock, managing partner at Vertex Ventures Southeast Asia & India.

Read the full article here.

An article written by Bisnis.com. Read the full article here.

PT Bank CIMB Niaga Tbk. collaborates with Genesis Alternative Venture (Genesis), a leading venture debt company in Southeast Asia to channel financing to Indonesian start-ups with a total commitment of IDR 300 billion.

CIMB Niaga Head of Commercial Banking Widodo Suryadi said that one of the company’s priorities is to support and assist customers and partners, including start-ups so that they can mutually maintain business continuity. Therefore, the funding commitment that has been prepared with Genesis is expected to be an alternative source of funding for potential start-up companies that have not met the criteria for conventional bank loans.

“Together with Genesis, we will continue to seek and provide financing for potential start-ups while at the same time expanding the funding ecosystem for start-up companies in Indonesia,” added Widodo.

As is known, venture debt is a form of financing that is directed to companies developing that shows great growth prospects and the need to maintain and extend its cash runway to reach the stage of growth, while reducing the dilution effect of fund-raising are done.

This financing scheme that combines the principles of conventional bank credit and ventures loan companies is the first in Indonesia.

Read the full article in Bahasa here.

An article written by Kontan.com. Read the full article here.

The period of the COVID-19 pandemic can be referred to as natural selection for business people, both large and small, including start-ups. The start-up business is considered to be one of the industries that quickly adapts and survives the pandemic.

To be able to continue to grow and accelerate business development, start-up companies need support, including in the form of financing. One of the banks that plays an active role in start-up financing is PT Bank CIMB Niaga Tbk (CIMB Niaga).

In 2019, the second largest national private bank in Indonesia began collaborating with a leading venture debt company in Southeast Asia, Genesis Alternative Ventures (Genesis) in channelling financing to start-up companies in the country with a total commitment of Rp. 300 billion.

CIMB Niaga Head of Commercial Banking Widodo Suryadi is optimistic that the start-up industry will play a significant role in supporting the Indonesian economy, especially in the current challenging conditions.

“We hope that the funding commitment we have prepared together with Genesis can be an alternative source of funding for potential start-up companies that have not met the criteria for conventional bank loans,” said Widodo.

Up to this point, the synergy between CIMB Niaga and Genesis has funded GoWork, a leading premium coworking space provider and Tanihub, an agriculture technology company.

Genesis co-founder and Managing Partner Dr. Jeremy Loh said he was very happy to have the trust of CIMB Niaga as a bank partner who wants to provide venture loans widely for potential start-ups in Indonesia.

Read the full article in Bahasa here.

The Co-Working Story Pre-COVID

Looking at pre-COVID statistics of the co-working sector is important in understanding its growth potential post-COVID. In a research report published in September 2019, Colliers International shared that flexible workspaces, comprising co-working spaces and serviced offices, had risen in prominence in recent years to become a mainstream real estate asset class globally. The number of co-working spaces globally had grown by a staggering compound annual growth rate of 121% between 2005 and 2018.

In Asia, as of Q1 2020, flexible workspaces had already accounted for more than 3% of net lettable area (NLA) in most markets compared to less than 2% in 2017.

Source: Colliers International Flexible Workspace 2020 APAC

Singapore represented the most mature co-working market in SE Asia. Singapore’s flexible workspaces accounted for 3.7 million sq ft of NLA of commercial space island-wide in 2018 – more than treble the 1.2 million sq ft available in 2015.

The Lockdown Begins

COVID-driven lockdowns started the world’s biggest work-from-home (WFH) experiment in early 2020. Armed with WiFi and a computer, the majority of office workers took to WFH with ease. It was clear that WFH offered a credible option – no time wasted commuting, increased productivity, no need to secure the large office long-term lease with high rental component. At the time, it was fair to also question the continued relevance of co-working spaces given WFH arrangements and social distancing.

Genesis’ portfolio company GoWork, Indonesia’s premier co-working space operator, had just turned EBITDA positive in December 2019. Expansion plans had to be frozen and the company acted swiftly to refine its operating SOP in order to cope with the new normal. Go-Rework (the parent company of GoWork) adapted quickly to mandated occupancy reduction, customers’ calls for split operations, social distancing, health checks etc. Taking a long-term view of the market, Go-Rework doubled efforts to sign-up enterprise clients that now required decentralized office spaces, and further leveraged their multilocation footprint in Jakarta allowing enterprises to split their teams across various GoWork locations for business continuity planning (BCP) purposes.

Key Observations Of Co-Working Spaces Globally During Covid

Demand from corporates is the biggest expansion driver – co-working is now a business solution, not just a real estate alternative.
Property developers are making co-working spaces a staple: for real estate owners, the presence of a co-working space in an office building or retail mall with 200-300 members has plenty of positive knock-on effects for retail and F&B in the same location.
Corporates increasingly use co-working spaces to house innovation teams. A deliberate strategy to locate innovation teams in a startup-like environment to promote independence and decentralised thinking.
Southeast Asia is a key battleground for dominance amongst operators with consolidation gaining momentum
Scale is important. Go-Rework itself, is the product of a merger between GoWork and ReWork in 2018. It is now the lead premium co-working space operator in Indonesia.

Looking ahead to 2021

Surveys have shown that extended WFH is not sustainable. A majority of employees (and employers) prefer a conducive office environment as it allows for greater focus and productivity, team collaboration, and human connection. In fact, Go-Rework has already reported a rebound to pre-COVID demand and revenues. Thus, while COVID has slowed the growth of co-working in the early phases of the pandemic, it has since proven to be a silver lining. It is expected that co-working spaces will play a key role as the traditional office model continues to get disrupted.

For the foreseeable future, corporates are expected to operate on a hybrid WFH /WFO model and co-working spaces are expected to be central to this evolution.

Source: JLL Human Performance Survey, May 2020

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AI Fintech Trusting Social raises venture debt from Genesis Alternative Ventures

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Genesis Alternative Ventures closes Southeast Asia’s first venture debt fund at US$80 million

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CIMB Niaga and Genesis Provide Funding for Indonesian Start-Ups

Co-Working Post Covid-19