Summary:
Genesis Alternative Ventures raises $125 million for its second debt fund.
Venture lending is gaining traction as startups seek alternatives to equity financing.
Current market conditions are challenging for Southeast Asia's startup ecosystem.
Over 80% of previous fund investors have returned for the new fund.
The fund has already lent over $20 million to nine startups.
Genesis Alternative Ventures Takes a Bold Step
Genesis Alternative Ventures, a prominent private lender focused on ventures and growth-stage companies, has successfully closed its second debt fund at $125 million. This achievement comes amid a cautious global investment climate, particularly in Southeast Asia's startup ecosystem.
A New Era of Venture Lending
The fund aims to finance young companies across Southeast Asia and has attracted notable new investors, including Mizuho Bank from Japan and OurCrowd Ltd. from Israel. Originally targeting between $120 million to $180 million, the fund took over two years to secure its closing amount.
Market Conditions Impacting Valuations
The current economic climate has driven many startups to explore venture lending, as they seek debt options rather than traditional equity financing. With a cloudy global economic outlook, tech valuations have faced significant pressure, complicating fundraising efforts for venture firms. Despite these challenges, Southeast Asia remains a tough nut to crack for both debt and equity investments, given the high-risk nature of many unprofitable startups.
Insights from Genesis Ventures
Jeremy Loh, co-founder and managing partner of Genesis, acknowledged the difficulties in raising funds in the current environment, stating, "It’s never easy to raise funds, and it’s been more difficult in this environment. This is a period where founders must demonstrate sustainable growth without excessive reliance on equity."
Strong Investor Support
More than 80% of investors from Genesis’s inaugural fund, including Aozora Bank Ltd., Korea Development Bank, and Silverhorn Group, have also backed the new fund.
Lending to High-Potential Startups
The second fund has already deployed over $20 million to nine startups, including Aonic, Eezee Pte, and Akulaku Inc. Genesis focuses on providing debt to startups that typically lack collateral or profitability, making them ineligible for standard bank loans. Their first fund, totaling $90 million, has successfully financed 25 startups across Southeast Asia, including notable companies like Akulaku and Pace.
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