Venture lending firm InnoVen Capital is a joint venture between Temasek and United Overseas Bank with investor commitments of $200 million. It works for its clients across different sectors including e-commerce, financial technology, logistics and big-data.
The firm specialises in venture debt which is now an emerging concept among startup enthusiasts. It has just signed two venture debt deals with Malaysia-based stock image database 123RF and Singapore-based digital media services provider Conversant Solutions.
123RF crowd-sources digital content from over 300,000 contributors from all across the world. The content then gets curated and is put on the platform. Founded in 2005, it currently has about 12 million active users and a million paid users. It rivals against companies like Adobe Stock, Shutterstock, among others.
The details of the deals remain undisclosed but InnoVen mentions that these firms are considered as later-stage enterprises. Commenting on thislChin Chao, the CEO of InnoVen Capital, Southeast Asia, said in a statement,
InnoVen isn’t limited to funding earlier-stage companies. We also provide venture debt to larger tech enterprises as a complimentary funding source to equity financing.
InnoVen, was formulated in Mumbai, India in 2008 and was re-branded in 2015 post-buyout of the business managed by Temasek and UOB. Later in 2015, it had set up another office in Singapore and targets to sign deals worth $500 million in Asia in the coming five years. It has a major focus on South-east Asian countries including Thailand, Malaysia and, Bangkok. While it is targeting to work on and finalise 50-60 deals in 2017.
An InnoVen spokesperson explained that the lending structure is similar to a bank loan. But InnoVen does not demand personal guarantees like, for example, banks require the borrower to use their financial assets as collateral. In addition, it also boasts of limited financial covenants, i.e., the metrics that the company is expected to fulfil.
Also, what sets its apart from VC funding is the fact that notes are not convertible, which is the reason it comes off as an appealing method for growth-stage companies. Investors and owners in 123RF and Conversant Solutions will see the company get a cash injection without much dilution in their stake in the company.