Venture Debt - Malaysia | Statista Market Forecast

The total capital raised in the Venture Debt market market in Malaysia is projected to reach US$101.10m in 2024.
Traditional Venture Debt dominates the market in Malaysia with a projected market volume of US$98.60m in 2024.
In global comparison, most capital raised will be generated the United States (US$22.4bn in 2024).
In Malaysia, Venture Debt is gaining traction as a financing option for startups looking to fuel their growth in the Capital Raising market.

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

Venture Debt market in Malaysia has been experiencing significant growth in recent years.

Customer preferences: Entrepreneurs in Malaysia are increasingly turning to venture debt as a financing option for their startups. This is primarily due to the fact that venture debt offers a number of advantages over traditional equity financing. Firstly, venture debt allows entrepreneurs to retain a larger stake in their company compared to equity financing, which is particularly appealing to founders who want to maintain control and ownership. Additionally, venture debt provides startups with a non-dilutive source of capital, allowing them to fund their growth without giving up equity.

Trends in the market: One of the key trends in the Venture Debt market in Malaysia is the increasing number of venture debt providers. As the demand for venture debt grows, more financial institutions and specialized lenders are entering the market to cater to the needs of startups. This increased competition has led to more favorable terms for borrowers, including lower interest rates and more flexible repayment options. Another trend in the market is the growing popularity of venture debt among early-stage startups. Traditionally, venture debt has been more commonly used by later-stage companies that have already raised significant equity funding. However, in Malaysia, there is a growing trend of early-stage startups utilizing venture debt to fund their initial growth and development. This is driven by the need for startups to quickly scale their operations and reach market traction, and venture debt provides a timely and efficient source of capital for this purpose.

Local special circumstances: The Malaysian government has been actively promoting the growth of the startup ecosystem in the country. This has led to the establishment of various initiatives and programs to support entrepreneurs, including access to financing options such as venture debt. The government's focus on fostering innovation and entrepreneurship has created a favorable environment for startups to thrive, leading to an increased demand for venture debt.

Underlying macroeconomic factors: The strong economic growth in Malaysia has also contributed to the development of the Venture Debt market. The country has experienced robust GDP growth in recent years, driven by a diversification of its economy and increased investment in sectors such as technology and innovation. This has created a conducive environment for startups to flourish, leading to a greater demand for venture debt as a financing option. In conclusion, the Venture Debt market in Malaysia is experiencing significant growth due to customer preferences for non-dilutive financing options, the increasing number of venture debt providers, the growing popularity of venture debt among early-stage startups, the government's support for the startup ecosystem, and the strong macroeconomic factors in the country. This trend is expected to continue as more entrepreneurs recognize the benefits of venture debt and as the startup ecosystem in Malaysia continues to thrive.

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.