LC Ideas: Views & Insights
Lighthouse Canton's maiden Venture Debt Strategy reaches first close
Lighthouse Canton, a Singapore headquartered investment institution, launched a venture debt strategy focusing on startups in India and South East Asia
The Fund follows the recently closed US$ 40mn LC Nueva Fund, which invests in early stage companies in India, strengthening Lighthouse Canton's foothold in the region's startup and entrepreneurial ecosystem.
SINGAPORE/INDIA (Monday, 16 January 2023): Global investment institution Lighthouse Canton has announced the first close of its newly launched venture debt strategy at US$ 20mn. Lighthouse Canton's regional venture debt strategy comprises a Singapore based Variable Capital Company (VCC) for investments in South East Asia, and a Category II Alternative Investment Fund (AIF) for investments in India. Lighthouse Canton is targeting to raise US$ 100mn for this strategy and has already seen participation from global institutions and family offices.
The Fund shall provide debt capital to technology-enabled companies which are part of the startup ecosystem in the region. For companies with sound business models and viable unit economics, venture debt is an alternative source of growth funding, which is gaining traction amongst regional startup companies now.
In recent years, Asia's startup ecosystem has witnessed a boom, attracting 38% of all venture capital deal flows globally(Source: State of Venture 2022 Report, CBInsights) last year. At the end of 2022, there were 1,205 unicorns globally, with 27% hailing from Asian countries such as China, India, South Korea, Indonesia, and Singapore. Indian startup ecosystem is the third largest in the world, only behind the United States of America and China, with nearly 10% of all global unicorns based in India - and is posed to grow further.
"As the pace of venture capital activity continues to grow, it is logical that we would see a rise in venture debt demand," said Lighthouse Canton's Global Head of Asset Management, Sanket Sinha. "In more mature venture ecosystems such as the US and Europe, venture debt has risen to 15-20% of the total VC funding, whereas this proportion is less than 2% in India and South East Asia. Given the growth of venture ecosystem in India, we see tremendous opportunity for venture debt, and we expect the size of this market to grow 3-4x in the next five years."
"Given that our venture debt strategy is regional, we can also support a startup with aspirations to expand out of the domestic market. Our presence in other markets uniquely positions us to partner with companies with international expansion plans and help them with their financing needs.", explains Lighthouse Canton's Director for venture debt, Ankit Agrawal. "Our investors and partners appreciate the value we bring to the ecosystem, and we are witnessing healthy demand for this asset class". LC Venture Debt fund expects to deploy the capital in the next two years across 35-40 companies.
Lighthouse Canton has been actively building its capabilities in the venture investment space, and this is the second Fund launched within one year focused on the venture ecosystem. Earlier this year, Lighthouse Canton partnered with Nueva Capital to launch its maiden venture capital fund, LC Nueva, focused on pre-series A and series A companies in India. The Fund was oversubscribed and had successfully applied for additional capacity with the regulator.
Headquartered in Singapore, Lighthouse Canton is a global investment institution with wealth and asset management capabilities. The firm has over 100 experienced professionals in Singapore, Dubai, and India, and it oversees over US$ 3 billion worth of assets under management and advisory (as of 30th Sep 2022). Lighthouse Canton has a dedicated strategy to cater to the needs of startups and their founders. Lighthouse Canton's Founders' Ecosystem, as it is known, is the firm’s commitment to helping startups and their founders enhance performance and plan for their personal and business legacies at various stages in their life cycles. The initiative provides Founders and startups added value through other venture investments, and business solutions as well as personal wealth management services These solutions range from funding solutions for companies across the capital structure to pre- and post-monetization funding needs of the founder. The firm also works closely with the founders and senior management on business structuring and personal wealth solutions.
