In this Masterclass on the fundamentals of venture debt with entrepreneurs at global early-stage VC Antler, Dr. Jeremy Loh shares the following insights:
Background of venture debt industry
Blended costs of capital of traditional bank debt, venture equity and venture debt
The relationship between venture equity and shareholder dilution
How venture debt can be successfully used as a complementary financing tool to equity financing
Advice for future founders with big ambitions and need capital to scale
In Southeast Asia, venture debt is fast emerging as an alternative and complementary source of financing for high-growth technology companies that traditionally only raised equity as a source of capital.
At its core, venture debt is entrepreneur-friendly as it helps founders and cash-hungry startups avoid over-diluting shareholder equity at early stages of a company’s growth. Used appropriately, venture debt can also extend the cash runway between fundraising rounds, sometimes helping companies achieve performance targets set by equity investors (or avoid dreaded valuation down-rounds). Another benefit of venture debt is that, in appropriate instances, it is able to support companies facing unexpected market turbulence or short-term capital traps.
While already an established alternative financing source in the US, Europe, Israel and India, venture debt has only recently emerged in Southeast Asia as a mainstream financing option for high growth tech companies. In 2015, the Singapore Government identified venture debt financing as a key driver to boost the local start-up ecosystem. Singapore launched a S$500 million venture debt programme to encourage qualified lenders to provide venture debt to technology start-ups. In recent years, there has been a marked increase in venture debt activity in the region.
For more information, download the full report here.
