DBS Bank has unveiled a financing scheme to provide an alternative option for tech startups seeking capital in Singapore.
The venture debt programme is designed specifically for startups that have already secured previous funding from angels or venture capitalists. To quality for the scheme, tech startups must be backed by DBS' partner venture capitalists including Vertex Venture, Monk's Hill Ventures, and Golden Gate Ventures, the bank said in a statement.
They must have raised more than S$1 million in Series A funding and be incorporated for at least two years. The startups also should have been in operation for at least one year and have demonstrated a commercially viable business model, DBS said.
"Tech startups can use DBS venture debt for working capital, fixed assets acquisition, and even project financing," the local bank said, adding that there was increasing demand for such financing schemes in Singapore.
Citing research from the Singapore Venture Capital and Private Equity Association, DBS said the country was the leading market for startups in Southeast Asia, generating US$454 million in venture capital deals last year, compared to US$918 million in the rest of the region.
According to Asian Venture Capital Journal, Singapore tech startups in 2013 secured US$1.71 billion in venture capital, surpassing that of Hong Kong, Japan, and South Korea. Funding channeled toward local tech companies accounted for 19 percent of total funding across Asia in 2013, up from just 0.3 percent or US$27.9 million in 2011.
Lim Chu Chong, head of SME banking at DBS, said: "We are pleased to be one of the first banks in Singapore to offer venture debt as an alternative capital-raising option for tech startups. Tech startups can use venture debt to complement venture capital, and buy more time and flexibility for their businesses to hit key development milestones, which can potentially increase their company valuations.
"We hope this will be a boost to the startup ecosystem in Singapore and help innovative tech companies scale up and reach profitability at a faster pace," Lim added.