Charting SE Asia’s venture debt market rise

(The Asset, 20 June 2022) Catalyst for budding start-ups, ample headroom for continuing upward momentum

by Sanket Sinha, Global Head of Asset Management and Ankit Agrawal, Director for Venture Debt at Lighthouse Canton

‍For anyone who has been closely following the technology industry, it is hard to ignore all the talk about doom and gloom. Coming off from 2021, which was a record-breaking year in terms of valuations and funding activity, 2022 has seen a significant decline with global funding in the first quarter having fallen by 19% to US$144 billion from last quarter, according to CB Insights. Global venture capital (VC) funds have sounded multiple alarms to their portfolio companies to brace for the upcoming slowdown and focus on building a cash runway and sustainable growth as days of cheap capital (read equity) have come to an end.‍

It is during times like these that venture debt comes to the rescue and is set to play a bigger role. While venture debt is still in its infancy in Southeast Asia compared to markets such as the United States and Europe, it is quickly emerging as a viable and complementary financing option for high-growth start-ups in the region, which has predominantly depended on equity raising as a source of capital.‍

Both the Covid-19 crisis and the ongoing slowdown have underlined the importance of....