OSK Ventures CEO Amelia Ong
In Southeast Asia’s startup market, the era of “raise fast, spend faster” has given way to a more disciplined question: how can companies keep growing without giving away too much of themselves?
That shift is creating room for financing products that sit between bank loans and venture capital. OSK Ventures International and Affin Hwang Investment Bank are now moving into that gap with the launch of Pothos Fund I, a dedicated venture debt fund aimed at high-growth companies across Southeast Asia.
Also Read: Venture debt in SEA: The non-dilutive capital that comes with hidden legal strings
The fund, managed through Pothos GP, has a three-year investment tenure and will provide debt-equity hybrid financing to companies that have moved beyond the earliest stage of startup life. Rather than backing ideas that are still being tested, Pothos Fund I will target revenue-generating businesses with proven models, stronger management teams and more predictable cash flows.
For founders, the appeal is straightforward. Venture debt can extend a company’s runway or fund expansion without forcing management teams to raise another equity round at an unfavourable valuation. For investors, the product offers exposure to private technology companies through a structure that includes contractual income, downside protection and selective equity participation.
The launch also gives sophisticated investors in Malaysia access to an asset class that has historically been more common among large institutional investors.
Why venture debt is becoming more relevant
Venture debt is not new, but it has become more visible as startups and investors reassess the cost of capital. In simple terms, it is a loan designed for venture-backed or high-growth companies that may not yet fit the credit models used by traditional banks. It is often paired with warrants or other equity-linked features, giving lenders some upside if the borrower performs well.
In Southeast Asia, the model has become more relevant for several reasons. The region’s digital economy has matured, producing more companies with recurring revenue, payment histories and expansion plans across multiple markets. At the same time, equity funding has become more selective after the global correction in tech valuations.
That combination has put pressure on founders to become more capital-efficient. Raising equity remains essential for many startups, especially those in capital-intensive sectors such as fintech, logistics, climatetech and artificial intelligence infrastructure. But for companies with clearer revenue visibility, debt can be a useful tool to finance working capital, product development, market expansion or acquisitions.
The timing is important. Southeast Asia’s startup ecosystem is no longer defined only by early-stage venture rounds. More companies now sit in the middle: too mature to be treated like seed-stage bets, but not yet large or profitable enough to borrow easily from commercial banks. It is this middle layer that venture debt funds are trying to serve.
What OSKVI and Affin Hwang bring to the table
The partnership combines OSKVI’s venture investing background with Affin Hwang’s capital markets and private markets structuring experience.
OSKVI, listed on Bursa Malaysia, has invested in, supported and exited more than 50 technology and enterprise companies across Southeast Asia over the past two decades. That history matters in venture debt, where lenders need to assess not only cash flow but also investor backing, founder quality, sector dynamics and the likelihood that a company can raise future capital if needed.
Also Read: Venture debt: How it stacks up against loans and equity
Affin Hwang brings a different set of capabilities, including fundraising, distribution, private markets structuring and access to institutional and sophisticated investors. Those strengths are useful at a time when wealth managers, family offices and other sophisticated investors in the region are looking for alternatives to public equities and traditional fixed income.
Pothos GP, the fund manager of Pothos Fund I, is a subsidiary of OSKVI, with strategic equity participation from Affin Hwang Investment Bank.
Amelia Ong, CEO of OSK Ventures International, framed the fund as part of a broader shift in how startups are financed.
“Having worked with entrepreneurs across Southeast Asia for many years, we have seen firsthand how access to the right capital at the right time can make all the difference,” she said. “As companies mature, their financing needs evolve, and venture debt provides a valuable option alongside traditional equity funding.”
A more crowded alternative capital market
Pothos Fund I enters a regional market where venture debt is still underdeveloped compared with the US or India, but no longer empty. In Southeast Asia, players such as InnoVen Capital, Genesis Alternative Ventures and AFG Partners have helped familiarise founders and investors with non-dilutive or less-dilutive growth capital.
Globally, the space includes specialist lenders such as Hercules Capital, as well as bank-linked providers such as HSBC Innovation Banking, which absorbed parts of Silicon Valley Bank’s operations outside the US after SVB’s collapse.
India offers a useful comparison for Southeast Asia. Over the past decade, venture debt firms such as Trifecta Capital and Stride Ventures have built sizeable businesses by lending to startups that had institutional equity backing and clearer paths to revenue. Southeast Asia has similar ingredients, but its market remains more fragmented, with startups operating across different regulations, currencies and customer behaviours.
That fragmentation can make lending harder. A startup expanding from Malaysia to Indonesia, Vietnam, or the Philippines faces different legal systems, payment rails and market risks. For venture debt funds, this means underwriting must go beyond a company’s balance sheet. It requires a view on the founders’ execution record, existing investor support, customer concentration, repayment capacity and the durability of demand.
The founder’s trade-off
Venture debt is often described as less dilutive, but it is not free money. Borrowers need to make repayments, and lenders typically include covenants or protections. If a company misses growth targets or burns cash faster than expected, debt can become a burden.
That is why funds such as Pothos Fund I are more likely to suit startups that already have revenue and a credible plan for cash generation, rather than early-stage companies still searching for product-market fit. Used well, venture debt can help a company avoid raising equity during a weak funding market. Used poorly, it can add pressure at precisely the moment a startup needs flexibility.
For Southeast Asian founders, the significance of Pothos Fund I lies less in the launch of a single fund and more in what it signals about the market’s direction. The region’s financing stack is becoming more layered. Equity capital remains important, but founders increasingly have more choices: revenue-based financing, venture debt, private credit, bank partnerships and strategic capital.
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That evolution is healthy. A mature startup ecosystem needs more than one type of money. It needs risk capital for bold ideas, growth capital for scaling businesses and credit products for companies that have earned the right to borrow.
Pothos Fund I is arriving at a moment when investors want more discipline and founders want more control. If it can find the right borrowers, it could help fill one of Southeast Asia’s persistent funding gaps: capital for companies that are growing up, but not yet ready to behave like traditional corporates.
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