SINGAPORE (July 17): When start-ups accept money from venture capitalists, the founders are often asked to give up a significant portion of their ownership in return for additional equity financing. Venture debt funds are an alternative way for start-ups to raise funds, minus the equity dilution.

“When you have to sell equity in your company to raise money to buy, for example, depreciating assets, it is an expensive exercise,” Ben Benjamin, co-founder and partner of Genesis Alternative Ventures, tells The Edge Singapore in an interview. Genesis is Southeast Asia’s first private venture debt firm.

“So if the company is already doing quite well, they’ve got good investors, revenue and business model, why not take debt financing? It’s what SMEs would usually do — go to a bank and ask for a line of credit. So, we give these companies the opportunity to take on some debt, and at the same time lessen the equity dilution in parallel with equity fundraising,” he says.

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