The financial details of the deals were not announced, but InnoVen did highlight that both of these startups would be considered later-stage enterprises.
123RF is a company that has leveraged its large stock photo library to compete on a global stage and grow into one of Malaysia’s success stories.
Conversant Solutions is a company that facilitates digital media production with its ‘Swift’ brand of products. They include services like file transcoding, cloud integration and a content management system.
In January, Conversant signed an MOU with Alibaba Cloud to build an online education platform in Kuala Lumpur called EduCloud.
Raising money through the venture debt route is an alternative for companies looking for a cash injection without raising a VC round or taking out a bank loan. It is often used for growth capital for startups who may not pass the metrics used by traditional banks.
An alternative cash-injection
According to an InnoVen spokesperson, the structure is similar to a bank loan, but they do not require personal guarantees (sometimes banks ask for business owners to use their own financial assets as collateral). InnoVen also has limited financial covenants (metrics that the company is expected to meet).
What makes it different from VC funding is the notes are not convertible, which is why it an attractive avenue 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.
“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,” said Chin Chao, the CEO of InnoVen Capital, Southeast Asia, in a statement.
“Both the 123RF and Conversant deals exemplify the important role that venture debt plays throughout a company’s life-cycle.”
InnoVen Capital is expecting to ink 50-60 deals in 2017, according to the spokesperson.
The venture lending platform is active across Southeast Asia and India.
Copyright: jamesteohart / 123RF Stock Photo