Temasek-backed Innoven to manage external capital with launch of South-east Asia, India funds

INNOVEN Capital, one of the pioneers of venture debt in South-east Asia, is raising money from external investors for the first time, as large amounts of liquidity fuel the region's tech boom.

The firm, a joint venture between Temasek-owned Seviora and UOB, has committed US$50 million to anchor its new South-east Asia fund and is seeking additional investors. It is now closing three deals with startups.

This follows the launch of an India fund last month, for which InnoVen has committed 7.4 billion rupees (S$132.8 million).

InnoVen's budding structure mirrors that of Temasek's venture capital (VC) unit Vertex Holdings, which evolved from a VC entity to an investment holding company anchoring a global network of Vertex funds.

Such a structure has enabled the funds to raise more capital from a diverse range of investors while giving the fund managers operational independence.

Venture debt is a growing asset class in Asia. Startups use it to reduce equity dilution, while investors can benefit from the equity upside from warrants in portfolio companies.

BT in your inbox

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign Up

Sign Up

Since 2015, InnoVen has disbursed over US$900 million in loans across India, China and South-east Asia. More than 20 portfolio companies have hit a valuation of at least US$1 billion.

InnoVen's South-east Asia fund will be managed by partners Paul Ong and Ben Cheah. The pair have led investments in more than 50 companies including Carsome, Ruangguru, Tiki, Akulaku and eFishery, with cumulative loan disbursements of more than US$180 million.

Ong said in a statement: "The South-east Asia venture ecosystem is maturing, with a record number of unicorns minted, notable exit activities and significant global investment capital inflows observed this year."

He told BT that InnoVen's rate of loan disbursement has picked up as companies raise money in quicker intervals. Winners from the pandemic's K-shaped recovery are already being picked out.

Cheah added in a statement: "As the South-east Asian ecosystem continues to mature, we expect the demand for venture debt to increase as more companies take advantage of less dilutive capital to grow even faster."