TLDR:
– Venture debt is becoming an alternative source of funding in Indonesia’s tech industry as venture capital tightens its purse strings.
– Venture debt provides loans to start-up companies, with an equity option for investors.
In Indonesia’s tech industry, venture debt is emerging as an alternative source of funding as venture capital becomes harder to come by. The role of venture debt has grown significantly, with Pitchbook reporting a 50% increase in venture debt in Indonesia to $109 million in 2023. Darryl Ratulangi, managing director of OCBC Ventura, stated that when equity funding becomes tight, more people will turn to venture debt. However, he emphasized that venture debt is not suitable for all start-ups and is best suited for companies looking to expand rather than building infrastructure. Jeremy Loh, managing director of Genesis Alternative Ventures, highlighted the long-term prospects of venture lending, stating that it provides a hybrid product that integrates a VC equity portion and a bank loan portion. This makes venture debt attractive to investors, as it offers both equity options and loans to start-up companies.
