OSKVI and Affin Hwang Launch Venture Debt Fund for Southeast Asian Startups

OSK Ventures International (OSKVI) and Affin Hwang Investment Bank have officially entered the venture debt space with the launch of Pothos Fund I, signaling a shift in how Southeast Asian startups approach capital acquisition.

The initiative targets the growing gap in the region's financial ecosystem, specifically catering to companies that have outgrown traditional banking products but wish to avoid the heavy equity dilution associated with venture capital rounds. According to the original publisher, this move represents a departure from the "raise fast, spend faster" model that previously dominated the startup landscape, favoring a more disciplined approach to financial management.

Venture debt functions as a financing product that sits between standard bank loans and equity-based venture capital. By providing debt capital, Pothos Fund I allows high-growth companies to extend their cash runways and fund operations or expansion plans while founders retain greater ownership and control of their businesses.

The mechanics of the fund are designed to support startups that have established commercial traction but require non-dilutive capital to reach their next major milestone. While specific figures regarding the total size of Pothos Fund I or the interest rate structures have not been disclosed, the collaboration combines OSKVI’s venture investment expertise with the institutional backing of Affin Hwang.

For Malaysian SMEs and tech founders, this development offers a crucial new lever for growth in a complex economic climate. As Malaysia maintains a robust real GDP growth rate of 6.0% year-on-year, businesses are under increasing pressure to scale efficiently. Local startups that previously relied solely on equity investors can now leverage venture debt to bridge gaps in their balance sheets, effectively buying more time to achieve profitability without surrendering additional stake.

For the Malaysian investor or employee, this shift suggests a move toward greater corporate maturity within the local tech ecosystem. Employees working for firms that utilize venture debt may find a more stable path forward, as companies that are not constantly diluting their equity often focus more heavily on sustainable revenue growth and operational longevity rather than short-term valuation spikes.

This launch arrives at a time of broader economic transition in Malaysia. With headline inflation holding at 1.8% year-on-year and a national unemployment rate of 3.0%, the environment for capital-intensive businesses remains challenging. As fuel costs vary, with unsubsidized RON95 reaching RM3.82 and diesel at RM4.72, operational costs for tech-enabled logistics and service firms are under constant scrutiny. Venture debt provides a strategic buffer, allowing these companies to navigate inflationary pressures while continuing to invest in headcount and infrastructure.

The introduction of Pothos Fund I mirrors a wider regional trend toward financial sophistication. Previously, the Malaysian startup scene relied heavily on a binary choice between bank debt—which often requires substantial collateral—and venture capital. This fund fills the middle ground, providing a lifeline for firms that have the revenue to support debt service but lack the physical assets often demanded by traditional lenders.

Looking ahead, industry observers will likely monitor the criteria for debt issuance. It remains to be seen whether this fund will focus primarily on Malaysian-based entities or adopt a broader Southeast Asian mandate. Furthermore, the specific sectoral focus of the fund, such as whether it will prioritize high-growth AI or green-tech ventures, has not yet been confirmed by the partners.