Venture Debt - Eastern Asia | Statista Market Forecast

The Venture Debt market market in Eastern Asia is projected to reach a Total Capital Raised of US$10.26bn in 2024.
Traditional Venture Debt is expected to dominate the market with a projected market volume of US$9.25bn in 2024.
In global comparison, the United States will lead in Capital Raised, with US$22.4bn in 2024.
In Eastern Asia, Venture Debt is gaining popularity among tech startups in South Korea, providing non-dilutive financing options for growth.

Definition:

The Venture Debt market refers to a form of equity and debt financing combination, which is used to finance early stage and growth stage capital-backed companies. Besides equity funding rounds, business can seek venture debt that minimizes ownership dilution and governance requirements to increase the cash runway to reach the next milestone or even provide a cushion for delays.

Structure:

The market consists of two segments:
- The Traditional Venture Debt market refers to a form of debt financing that is often provided to venture-backed companies to either buy new equipment, meet a deficiency of short-term capital, or support expansion plans.
- The Growth Venture Debt market refers to a form of debt financing that is often structured with warrants or options, which provides a rapid development stage in which businesses can support their long-term oriented growth plans.
The market data comprises of the amount of capital raised, number of deals, and average deal size.

Key players in this market are companies such as Wells Fargo and Hercules Capital.

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Venture Capital
Venture Debt funds are sponsors by governments

The Venture Debt market in Eastern Asia is experiencing significant growth and development, driven by various factors such as customer preferences, market trends, local special circumstances, and underlying macroeconomic factors. Customer preferences in Eastern Asia have played a crucial role in the growth of the Venture Debt market.

Entrepreneurs and startups in the region are increasingly looking for alternative financing options beyond traditional equity funding. Venture Debt provides them with access to capital without diluting their ownership stakes, allowing them to retain control over their businesses. Additionally, Venture Debt offers more flexibility in terms of repayment schedules compared to traditional bank loans, making it an attractive option for companies in need of short-term capital.

Trends in the market further contribute to the growth of Venture Debt in Eastern Asia. The region has witnessed a surge in entrepreneurial activity, with a growing number of startups emerging across various industries. These startups often require additional capital to fund their expansion plans or bridge the gap between equity funding rounds.

Venture Debt fills this financing gap by providing startups with the necessary funds to fuel their growth. Moreover, as the Venture Capital industry in Eastern Asia continues to mature, Venture Debt has become an integral part of the funding ecosystem, complementing equity investments and providing a more balanced capital structure for startups. Local special circumstances also play a role in the development of the Venture Debt market in Eastern Asia.

The region's regulatory environment is becoming more conducive to venture financing, with governments implementing policies and initiatives to support entrepreneurship and innovation. For example, some countries in Eastern Asia have established government-backed funds or programs that provide guarantees or co-investment opportunities for Venture Debt providers. These initiatives not only encourage the growth of the Venture Debt market but also help mitigate the risk for lenders, making it an attractive option for both startups and investors.

Underlying macroeconomic factors contribute to the overall growth and development of the Venture Debt market in Eastern Asia. The region's strong economic growth, coupled with a favorable business environment, has created a conducive ecosystem for startups and venture-backed companies. As these companies continue to expand and scale, the demand for additional capital increases, driving the growth of the Venture Debt market.

Additionally, the low interest rate environment in many countries in Eastern Asia provides an attractive borrowing environment for startups, making Venture Debt an appealing financing option. In conclusion, the Venture Debt market in Eastern Asia is experiencing significant growth and development due to customer preferences, market trends, local special circumstances, and underlying macroeconomic factors. As startups and entrepreneurs in the region seek alternative financing options and the venture ecosystem continues to mature, Venture Debt has emerged as a vital component of the funding landscape, providing startups with the necessary capital to fuel their growth and expansion plans.

Data coverage:

Data encompasses B2B and B2C enterprises. Figures are based on the amount of capital raised, the average of deal size and the number of deals.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use data from OECD, annual financial reports of key players, industry reports, third-party reports, publicly available databases, and survey results from primary research (e.g., the Statista Global Consumer Survey). In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, CPI, number of small and medium-sized enterprises (SME), new businesses registered (number) . This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the S-curve function and exponential trend smoothing are well suited for forecasting digital products and services due to the non-linear growth of technology adoption.

Additional notes:

The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.

This report presents a comprehensive analysis and additional information on the Financial market, in a PDF format.

Venture capital is the term used to call the financial resources provided by investors to startup firms and small businesses that show potential for long-term growth. It has become a very important source of capital for entrepreneurs, who often have problems with financing their needs through risk-averse banks. Venture capital investments incorporate a high level of risk as only some of the VC-backed companies develop into successful and highly profitable businesses. In 2020, the leading venture capital backed company worldwide was the Manbang Group, which based in Nanjing, China.