CIMB Niaga and Genesis Build "Venture Debt" for Indonesian Startups, Prepare 300 Billion Rupiah Funds

Bank CIMB Niaga and Genesis Alternative Ventures established venture debt (venture loan) specifically to finance startups in Indonesia by preparing an initial fund of 300 billion Rupiah. The targeted startups are engaged in fashion and retail, manufacturing, F&B, property, health, digital security, and transportation businesses.

In an official statement, CIMB Niaga President Director Tigor M. Siahaan explained that the synergy with Genesis is expected to strengthen the company's role in developing the startup ecosystem in Indonesia. What's more, the steps taken by this company are unique because it was the first time they chose to take a strategy with venture debt.

"Indonesia's rapidly growing digital economy has made it one of the Hotspot technology in this area. We believe many entrepreneurs will see these products and services as integral tools for creating growth."

Most VCs choose to finance startups in the form of equity injections (shares). That's why this concept is more common in Indonesia. Founder issue new shares (rights issue) purchased directly by the VC. More or less like an IPO, but closed. There is also a convertible bond scheme (convertible loans), but less popular.

Tigor explained that this financing scheme could be an alternative for startup companies that lack cash flow and cannot meet the traditional criteria for bank loans. For venture capital, this also fills the space that has not been served by banks.

Quoted from Business, Tigor added that the company's decision to take this step was because there were startups that needed it equity funding and it's time to need credit. On the one hand, banks with signs that must be met, can meet these needs with this scheme.

Moreover, Genesis has deep experience in financing loan schemes in Singapore, finally making CIMB Niaga confident enough to implement it in Indonesia.

Tigor explained that venture financing is similar to credit. So there is a tenor and interest, but it will be adjusted to the debtor's criteria.

The company also pays attention to the track record of startups to mitigate the risk of non-performing loans. Because generally, startups engaged in technology are synonymous with the 'burn money' strategy.

"We also see companies that are ready in terms of management, supply, demand, but are difficult to grow due to limited funds," he explained.

He hopes this scheme can be utilized for young companies that have successfully demonstrated high growth and need to extend their cash base to reach the next stage of growth.

DailySocial CIMB Niaga has not received an additional response regarding the deeper reasons for taking this financing scheme, as well as future plans.

In Singapore, Genesis has financed three startups under the scheme venture debt. Among them Respect Cyber ​​Security, Grain, and co-working spaceGoWork. Quote from DealStreet Asia, Genesis has eight new startups to finance in pipeline-New.

Another venture capital in Southeast Asia with the same concept is also carried out by InnoVen Capital. The company claims to have disbursed up to US$500 million in credit to more than 200 startups.