DBS has come to the aid of cash-strapped tech startups with a new program that expands the capital-raising options available to them. Ordinarily startups in Singapore primarily rely on venture capital to fund their operations.DBS’ venture debt is an alternative source of capital for these firms to tap into, with little or no dilution to their equity. The dedicated venture debt solution is available to tech startups which are at the growth stage of their business life cycles. Tech startups can use DBS venture debt for working capital, fixed assets acquisition and even project financing. The venture debt can complement venture capital and buy tech startups time and flexibility to reach key development goals, which can potentially increase their company evaluations.
“We hope this will be a boost to the star-up eco-system in Singapore and help innovative tech companies scale up and reach profitability at a faster pace,” said Lim Chu Chong, Head of SME Banking, DBS Bank.”
Not all startups will qualify for venture debt funding. To qualify tech startups must:
• be strongly backed by DBS’ partner venture capitalists such as Vertex Venture, Monk’s Hill Ventures and Golden Gate Ventures
• have raised at least $1 million (SGD) of Series A funding
• be incorporated for at least two years
• be in operation for at least one year
• have a commercially viable business model
The DBS press release quotes a report from the Singapore Venture Capital and Private Equity Association (SVCA) that places Singapore as the best market for startups in Southeast Asia.
The figures are impressive. In 2014, $454 million (US) worth of venture capital deals were done in Singapore, compared with $918 million (US) in the rest of Southeast Asia.
In 2013 US$1.71 billion of venture capital funds were invested in Singaporean tech firms, only second to China with US$3.46 billion (US).
Funding devoted to Singapore’s tech firms, including from the government, amounted to a significant 19% of funding for Asia in 2013.