OSK Ventures, Affin Hwang Bet on Venture Debt as Southeast Asia’s Equity Market Narrows

OSK Ventures International Bhd and Affin Hwang Investment Bank Bhd have launched their first dedicated venture debt fund for Southeast Asia, moving into the space between venture equity and conventional bank lending as fundraising becomes more selective across the region.

Pothos Fund I has a three-year investment tenure and will provide debt-equity hybrid financing to high-growth companies. It is managed by Pothos GP Sdn Bhd, a subsidiary of OSK Ventures International, with strategic equity participation from Affin Hwang.

The fund targets sophisticated investors and will focus on revenue-generating businesses with proven models, strong management teams and predictable cash flows. Its stated return model combines interest and other contractual payments with protections designed to limit lender losses, plus potential upside through selective equity exposure.

Pothos Fund I has not disclosed its size. Neither OSK Ventures nor Affin Hwang has publicly identified a borrower, revealed the size of individual loans or provided details on pricing, maturities, security, covenants or potential equity kickers.

That distinction matters. Pothos is entering the market with an identifiable financing thesis, but there is not yet enough public information to judge how that thesis translates into underwriting or risk-adjusted returns.

The platform itself is also new. OSK Ventures’ 2025 annual report shows Pothos GP was incorporated in December 2025 and had not commenced business operations by the end of that year.

“As companies mature, their financing needs evolve, and venture debt provides a valuable option alongside traditional equity funding,” OSK Ventures’ chief executive Amelia Ong said when announcing the fund.

The Financing Gap Pothos Is Betting On

Pothos is betting on a structural market disconnect. Venture capital has not dried up in Southeast Asia, but a handful of massive megadeals are distorting the data, masking a much tougher fundraising environment for typical growth-stage companies.

Start-up funding in the region reached $4.22 Bn across 41 equity deals in June 2026, a four-year high, according to DealStreetAsia. But five megadeals accounted for 93% of the disclosed capital. A month later, funding fell 83.5% to $697.9 Mn across 30 deals.

The pattern was already visible earlier in the year. Southeast Asia recorded its lowest quarterly deal count in at least eight years during the first quarter of 2026, even as total funding value reached its highest level since the fourth quarter of 2022. Much of that apparent strength came from DayOne Data Centers’ $2 Bn Series C round.

The result is a market in which aggregate funding can look healthier than the financing environment confronting many companies.

That creates a specific opening for debt. A company with recurring revenue and increasingly visible cash flows may be too mature to keep selling equity every time it enters another market, hires a larger team or adds working capital. On the other hand, it may still lack the collateral, profitability history or conservative risk profile ordinarily demanded by commercial banks.

Venture debt can bridge that gap. It allows companies to raise capital without immediately giving up as much ownership as an equivalent equity round. But the trade-off is important. Dilution risk is replaced by repayment risk. Debt is, therefore, most useful to companies whose businesses are already sufficiently predictable to service it. It is not an equity substitute for businesses that remain fundamentally experimental.

Pothos is, consequently, targeting a narrower slice of the start-up market than its ‘high-growth’ label might suggest. Its stated preference effectively pushes it towards later-stage businesses where growth remains substantial but operating risk has begun to decline.

Private Credit Is Moving East, But Venture Debt Remains a Smaller Bet

The fund is also arriving as institutional investors devote more attention to Asian private credit.

Asia accounts for only about 4% of the global private-credit market despite generating a third of global economic output, according to Preqin. Asia-Pacific-focussed private-credit funds raised $2.7 Bn in the first quarter of 2026, well below the $10 Bn+ raised in North America and $9.9 Bn in Europe. Preqin expects assets under management in the region to reach $142 Bn by 2030.

That broader expansion should not be confused with a venture-debt boom. Much of Asian private credit is geared towards asset-backed lending, infrastructure, real estate and established companies where collateral, sponsors and covenants can provide lenders with additional protection. Lending to growth companies whose value is tied more heavily to future cash flows requires a different kind of underwriting.

Nor is Pothos entering an empty market, though its direct peer group remains small. The fund will face immediate benchmarking against established venture debt managers dedicated to the region. Among those are Singapore-based InnoVen Capital, which has deployed more than $300 Mn across more than 150 transactions, and Genesis Alternative Ventures, which closed its second Southeast Asia fund at $125 Mn. Beyond these established players, the wider regional alternative growth credit ecosystem consists of varying vehicle structures:

Southeast Asia’s Existing Venture Debt & Growth Credit Landscape

Category	Fund Manager/Platform	Key Institutional Backers	Structural Mandate
Bank-Backed Platforms	InnoVen Capital SEA	Seviora (Temasek)/UOB	Venture debt for start-up and growth-stage companies; more than $300 Mn invested across 150+ debt transactions
	EvolutionX Debt Capital	DBS Bank/Temasek Holdings	$500 Mn growth-debt platform for technology-enabled companies across Asia, initially focussed on China, India and Southeast Asia; Bloomberg reported in 2024 that it planned to allocate up to 70% of the fund to India.
	HSBC	HSBC Group	$150 Mn venture-debt offering for Singapore-based PE/VC-backed companies, alongside a separate $1 Bn ASEAN Growth Fund for new-economy businesses scaling across the region
Independent Lenders	Genesis Alternative Ventures	Mizuho Bank/Aozora Bank/Korea Development Bank (Fund II investors)	Southeast Asia-focussed venture debt fund backing VC-backed early- and growth-stage companies; $125 Mn Fund II closed in September 2024.
	Helicap	Institutional and professional investors	Private-credit platform providing senior secured loans to fintech firms and non-bank financial institutions across Southeast Asia and Asia-Pacific; more than $500 Mn in historical cumulative transaction volume
	Whitetail Asia	Not publicly disclosed	MAS-regulated private-debt provider offering growth financing to Southeast Asian companies.

Sources: Company websites, announcements and filings; DBS and Temasek; Bloomberg; HSBC Singapore; MAS Financial Institutions Directory. Compiled by Entrepreneur APAC.

Whether Pothos can capture that opportunity will depend on something its launch announcement cannot yet demonstrate. Can it find companies predictable enough to carry debt, price that risk appropriately and offer founders financing terms that are genuinely more attractive than selling another slice of equity? That is where the venture-debt proposition will ultimately be tested.