Key Takeaways
- Venture debt is a loan for startups that have raised venture capital. This grants additional capital without significant equity dilution.
- Singapore’s government offers venture debt through the Enterprise Financing Scheme – Venture Debt (EFS-VD). It provides loans of up to S$8 million, with a repayment period of up to five years.
- Unlike traditional bank loans, venture debt does not require startups to have significant collateral or positive cash flow. Lenders underwrite business venture loans based on the credibility of your institutional backers.
Singapore’s startup scene is maturing rapidly; today, it ranks #4 in StartUpBlink’s 2025 Global Startup Ecosystem Index Report, as companies here can access funding easily, including venture debt (also known as venture loans), business expansion loans, hire purchase loans, and working capital loans.
Venture debt might be for you if you own a startup with great potential that needs funding, but are wary of diluting equity. Banks, private lenders, and Singapore’s government offer this, supporting startups and nurturing the venture debt market.
Intrigued? This article will explain the key points of venture debt in Singapore and how it may support your business. Read on now!
What Is Venture Debt?
Definitions and Key Concepts
Venture debt is a cash loan usually obtained by a startup after an equity fundraising round (Series A, Series B, etc.). A startup considering venture debt is often young and growing quickly, but isn’t profitable yet. Essentially, it borrows money and repays it—plus interest—across a fixed number of instalments.
Interest rate: A percentage of the principal loan amount that a lender charges for borrowing money. Venture loans generally have higher interest rates than traditional loans.
Loan quantum: The maximum principal loan amount you’re eligible for. Lenders gauge this based on your recent equity fundraising round.
Warrant: The right to buy a percentage of the company’s shares at a certain price in the future, given to the lender. This percentage is based on the principal loan amount.
Loan tenure: How long you have to repay the loan. It also indicates the number of instalments.
Covenant: Additional conditions lenders set, such as revenue targets and minimum cash balances.
Fees: Apart from interest and warrants, charges for venture debt in Singapore may include a facility fee, an early repayment fee (also known as an end-of-term fee), and due diligence and legal fees.
How Venture Debt Differs From Venture Capital and Traditional Loans
| Loan Type | Venture Debt | Venture Capital | Traditional Loan |
| Definition | A cash loan for young startups with high potential. | Funding provided to startups by institutional investors in return for a stake in the company. | Financing from banks or private lenders, with approval based on the company’s financial history. |
| Equity Dilution | Yes, but insignificant. | Yes. | No. |
How Venture Debt Complements Equity
Because venture loans follow successful equity fundraising rounds, they are naturally complementary. Beyond this, venture debt provides startups the working capital they need to hit their next Series milestone and achieve a higher valuation—all without diluting their equity via institutional funding.
Who Is Venture Debt For?
Ideal Company Profile
Rapidly growing young startups with seed funding from institutional investors can consider utilising venture debt in Singapore as a strategic financing tool. They require capital to expand further and build their credit history, but aren’t yet eligible for traditional bank loans. Additionally, such companies usually aim to minimise equity dilution, making business venture loans highly attractive to them.
Which Businesses May Not Qualify for Venture Debt Financing?
Startups without institutional investor funding, such as those fully funded by individuals, are unlikely to qualify for venture debt in Singapore. Companies with poor performance or no clear path to profitability may not qualify as well, even if they are funded by institutional investors.
Typical Use Cases of Venture Debt
These include, but aren’t limited to:
- Bridge financing from one equity fundraising round to the next
- Working capital to fund day-to-day operations and unexpected expenses
- R&D to enhance existing products or create new product lines
The Enterprise Financing Scheme – Venture Debt (EFS-VD)
An Overview of the ESF-VD
The Enterprise Financing Scheme – Venture Debt (EFS-VD) from Enterprise Singapore is a venture debt facility for high-growth startups without collateral to obtain financing from traditional bank loans.
EFS-VD Loan Details
- Loan quantum – S$8 million per borrower, and S$20 million for the overall borrower group
- Loan tenure – Up to five years
- Interest rate – Dictated by the participating financial institutions
- Risk Share – 70% for young enterprises. 50% for more established startups.
EFS-VD Eligibility Criteria
- Your business must be registered and operating in Singapore. Sole proprietorships, partnerships, limited liability partnerships, and companies are eligible.
- Singaporeans and/or Singapore Permanent Residents hold at least 30% of your firm’s local equity.
- Your startup has an annual sales group turnover of S$500 million or less.
Participating Financial Institutions
- DBS
- OCBC
- UOB
- HSBC
Venture Debt Providers in Singapore
Banks Offering Venture Debt
DBS: The bank’s Venture Debt Financing programme is for tech startups that have (i) significant funding from a DBS partner venture capital firm, (ii) fundraised at least S$3 million in equity from institutional investors, and (iii) can prove their business is sustainable.
HSBC: It introduced a US$150 million venture debt fund in 2024 and a US$1 billion ASEAN Growth Fund, which complements its US$200 million New Economy Fund for young startups.
OCBC: As a participant in the EFS-VD, the bank offers startups up to S$8 million in venture debt financing.
Specialist Venture Debt Providers
InnoVen Capital SEA: This provider was founded in 2015 and invested US$300+ million in high-growth startups throughout the years. It has expanded to China and India as well.
Genesis Alternative Ventures: Founded in 2018 by a group of experienced banking and investing professionals, Genesis Alternative Ventures has funded over 30 firms, including Lucence and Zenyum.
EvolutionX Debt Capital: This platform, created by DBS and Temasek, primarily invests in tech companies across healthcare, education, and several other sectors.
Alternative Venture Debt Platforms
Jenfi: This private lender offers funding based on your revenue, with repayments adjusted according to your company’s performance. I.e., lower instalments during slower months.
How to Apply for Venture Debt in Singapore
The Application Process
Step 1: Check Whether You’re Eligible for Venture Debt
Consult your investors and directors to confirm this while you prepare the supporting documents.
Step 2: Choose a Venture Debt Lender
Reach out to lenders and compare several term sheets before deciding.
Step 3: Submit Your Venture Loan Application
Remember to factor this funding into your firm’s financial planning, too. Before approving your application, the lender will conduct due diligence, such as requesting credit reports from Credit Bureau Singapore (CBS).
Step 4: Be Approved and Receive Your Funds
Negotiate with the lender to improve the term sheet’s conditions as well.
3 Tips for a Successful Application
1. Understand Venture Debt and Its Terms
You don’t need to be a financial wizard, but it’s important to understand how venture debt works and how to read a term sheet.
2. Reply to Lenders Quickly
This lets them know you’re serious about taking up a venture loan, especially when they request additional information.
3. Provide Full Visibility
Be ready to send across business projections, fundraising history, and KPIs. These clarify whether your startup is a trustworthy borrower for a business venture loan.
Fees and Costs of Venture Debt in Singapore
Apart from interest and warrants, charges for venture debt in Singapore may include:
- Facility fee
- Early repayment fee (also known as an end-of-term fee)
- Due diligence and legal fees
Advantages and Disadvantages of Venture Debt
Benefits of Venture Debt
1. Significantly Lower Equity Dilution
You retain greater ownership and the value of each share you hold.
2. Quicker Access to Funding
A venture loan can be approved in around two months, compared to waiting for the next funding round.
3. An Extended Runway
Venture debt provides your startup with the capital it needs to operate smoothly and achieve business goals.
Risks and Drawbacks
1. Relatively Higher Interest Rates
Because venture debt is for promising startups without an established track record, lenders are inevitably taking on more risk. Therefore, interest rates are usually higher than those on business loans in Singapore.
2. Negative Cash Flow Impact
Your startup might get a capital injection, but repayments are fixed, and lenders are strict about this. Include this monthly cost in your cash flow.
3. Potential Defaulting
Even if you’re punctually repaying your venture loan, violating a covenant can count as defaulting on your loan. This opens up the option to lenders to demand full repayment immediately—something you definitely won’t be happy to deal with, especially when cash flow is already tight.
Case Studies: Venture Debt in Singapore
Real-World Example #1: Atome
“Buy Now, Pay Later” (BNPL) platform Atome launched in 2019 and today, it’s among the most popular BNPL services in Singapore. In 2025, its revenue exceeded US$500 million. This wouldn’t have been possible without venture debt, as Atome gained a US$80 million private credit facility in 2025 and renewed a US$345 million syndicated debt facility in 2026.
Real-World Example #2: Lucence
Biotech firm Lucence was founded in 2016 to provide non-invasive solutions to detect cancer and other aging-related diseases. Genesis Alternative Ventures has provided venture debt to Lucence, helping the startup achieve its goal of expanding to the USA.
Conclusion – Venture Debt as a Tool
Venture debt in Singapore is a powerful tool for startups with great potential. It accelerates your business’s growth, empowering you to capitalise on opportunities quicker without having to worry about the firm’s shares. While there are drawbacks, careful planning and seeking your investors’ expertise can help mitigate these risks.
If you need an SME lender you can count on, look no further than Holistic Enterprise! We offer a wide range of business loans for startups in every industry. Apply online anytime or reach out to us to learn more about how we can help your company grow.
Venture Debt: Frequently Asked Questions (FAQs)
1. When should you consider venture debt?
Consider venture debt when you have a clear path to your next funding round, have identified a merger, acquisition, or IPO opportunity, or have large cash flow fluctuations.
2. Is venture debt secured or unsecured?
Venture debt is unsecured, but warrants and covenants can be “collateral” to secure the loan.
3. How do you repay venture debt?
For the most part, you’d repay your venture loan via monthly instalments.
4. What happens when you can’t repay venture debt?
The lender can change the loan’s terms or even seize company assets. Your startup might even be forced into bankruptcy.
5. How do you choose a venture debt lender?
A venture debt lender should:
- Offer a business venture loan with good, competitive terms
- Have a history of investing in your startup’s sector
- Want to build a lasting relationship with your firm
6. What’s the ideal amount of venture debt for my business?
The business venture loan should lengthen your company’s runway by approximately six months. Alternatively, it can be between 6-8% of your company’s most recent valuation.
