In this increasingly austere period of fundraising, debt financing is for many start-ups the only option to tide over a difficult period — yet institutional lenders often refuse or are unable to lend to early-stage companies. There is an alternative: venture debt.
Venture debt is debt specifically provided to early-stage companies and start-ups. To compensate for higher risk, venture lenders charge higher interest, may take security, and commonly require share warrants expressed as 'warrant coverage' over the loan amount.
Unlike institutional lenders, venture lenders weigh the involvement of venture capital firms heavily, face greater information asymmetry, and in Southeast Asia operate across a fragmented legal landscape — often lending to a holding company with security granted by operating subsidiaries across jurisdictions.
If you have any questions or require any additional information, please contact Soh Chun Bin and Wong Ee Vin.
