This interview originally appeared in the Mapping SEA & Indonesia’s 2024 Journey report released during the Indonesia PE-VC Summit 2025.
As equity funding waned in Southeast Asia in 2024, a notable trend emerged—a surge in debt financing. Startups clinched 16 debt deals in the final quarter of 2024, bringing the annual total to a six-year high of 54 deals. The value of the debt deals stood at $1.85 billion, a 150% year-on-year leap, show data from the DealStreetAsia DATA VANTAGE report Mapping SEA & Indonesia’s 2024 Journey.
While debt financing offers advantages, it cannot fully replace equity capital, said Darryl Ratulangi, Managing Director, OCBC Ventura in an interview for the report.
“We observe a growing trend of startups utilising debt financing to minimise dilution. However, we believe debt solutions are most effective as complementary to equity injections or as a bridge to future equity rounds,” added Ratulangi.
OCBC Ventura, the corporate venture capital arm of Indonesian lender PT Bank OCBC Indonesia Tbk, aims to close 7-10 equity and debt deals in 2025, prioritising the consumer, retail, healthcare, and education sectors, he said.
The firm backed the Indonesian coffee chain Kopitagram in a $4 million debt funding round in November 2024. Last year, it also backed the gelato brand Vilo and FTL Fitness, a gym chain operator, both of which were debt funding rounds worth around $3-5 million.
Its other investees include agritech firm EdenFarm, e-commerce enabler SIRCLO, fintech firms AwanTunai and GajiGesa, online media platforms IDN Media and USS Networks, proptech firms 99 Group, Rukita, and Jendela, and edtech company Flying Cape.
OCBC Ventura successfully exited one of its portfolio companies, Dekoruma, which was acquired by Blibli in June 2024. The CVC firm first invested in Dekoruma in a $15 million Series C1 round.
Edited excerpts of the interview with Ratulangi:
Amid the decline in venture capital investments across Southeast Asia, how have your investment financing activities evolved in 2024, and what are your funding priorities and goals as you look ahead to 2025?
In 2024, we continued to focus on the Indonesian market, providing both equity and debt financing to support local entrepreneurs. Looking ahead to 2025, we aim to close 7-10 deals (equity and debt), prioritising investments in the consumer, retail, healthcare, and education sectors.
While our insights into the venture debt market are limited, it’s clear that tech startups have increasingly turned to loans to finance their operations over the past two years. Could you provide your perspective on the dynamics of the regional venture debt market and share your outlook for 2025? What trends or challenges do you foresee shaping the sector moving forward?
We observe a growing trend of startups utilising debt financing to minimise dilution. However, we believe debt solutions are most effective as complementary to equity injections or as a bridge to future equity rounds. While debt financing offers advantages, it cannot fully replace equity capital.
Indonesia has struggled to attract robust VC investments this year, raising concerns about key market fundamentals, including the stability of consumer purchasing power and the sustainability of the middle-class growth narrative. How do you evaluate these challenges, and what might they signal for Indonesia’s investment climate and long-term growth trajectory?
We acknowledge concerns regarding the slowing growth of Indonesia’s middle class and income inequality. However, these challenges also present opportunities for new market entrants and agile companies to capture market share. While long-term consumer market growth in Indonesia remains promising, we anticipate a need to adjust expectations for growth rates.
How might shifting global geopolitical dynamics, including the return of a Trump presidency, impact the flow of venture capital into Indonesia? What adjustments should fund managers make to mitigate risks and leverage opportunities in this evolving landscape?
Given the recent change in Indonesia’s government and its proactive efforts to attract foreign direct investment, it is premature to assess the specific impact of potential global geopolitical shifts on venture capital flows into Indonesia.
Our data shows early-stage valuations are beginning to stabilise, yet late-stage companies continue to grapple with downward pressure. What factors do you think will shape these valuation dynamics in 2025, and could we see a reversal in late-stage trends?
We expect late-stage valuations to remain challenging unless the underlying fundamentals of late-stage startups significantly improve. The prevailing higher interest rate environment is likely to persist in the short term, further impacting valuations.