Southeast Asia’s startup and SME ecosystem is navigating a tight-money landscape defined by capital discipline, elevated interest rates, and rising customer acquisition costs. As traditional venture equity funding slows down and conventional bank lending remains constrained by rigid collateral demands, regional founders are being forced to rethink their capital stacks. Rather than raising massive equity rounds at diluted valuations, high-growth businesses are increasingly seeking flexible, non-dilutive funding solutions that align directly with real-time revenue performance. This structural shift has accelerated regional demand for Revenue-Based Financing (RBF) and private credit, particularly as SMEs seek to fund inventory, cross-border expansion, and productivity-boosting digital transformation projects without surrendering equity or board control.
We are seeing with the alternative financing company, Choco Up, a revenue-based financing and digital growth platform operating across Asia. By pairing AI-powered underwriting engines with institutional private credit facilities, such as its facility with AlteriQ Global, the platform delivers rapid capital assessments within 48 hours by evaluating real-time operational metrics rather than legacy balance sheets. Following an 85 per cent surge in Singapore SME financing requests, Choco Up is actively expanding its embedded finance capabilities through strategic platform integrations, helping portfolio companies fund essential AI upskilling, supply chain automation, and foundational ERP upgrades.
We examine why Southeast Asia climate tech has funding, but not the kind of capital it needs
We sit down with Percy Hung, CEO and Founder of Choco Up, to discuss the mechanics of non-dilutive financing in a disciplined funding environment. In this interview, we explore common founder misconceptions surrounding RBF, how AI data engines manage underwriting risk across fragmented regulatory frameworks, the rise of institutional private credit, and Choco Up’s expansion roadmap across Southeast Asia.
How has Southeast Asia’s post-VC tight-money environment driven SME demand toward Revenue-Based Financing (RBF) over equity or bank debt?
The funding landscape in Southeast Asia has become far more disciplined, prompting founders to be more intentional about how they finance growth. Rather than raising as much capital as possible, businesses are now more focused on building a balanced capital stack: using the right type of capital for the right purpose while preserving flexibility and ownership.
This is where Revenue-Based Financing (RBF) has become increasingly relevant. Many SMEs today are not struggling to generate demand. Instead, they are looking for funding that can keep pace with their growth. As businesses scale, they need funding to invest in areas like inventory, marketing, hiring, or expansion, well before those investments begin generating revenue. RBF helps bridge this gap by providing capital that is aligned with a business’s revenue performance, making it easier for businesses to invest when opportunities arise.
Unlike equity, RBF enables founders to access funding without dilution. It also serves as an alternative to traditional bank lending, which can remain out of reach for many SMEs due to collateral requirements or rigid credit assessments. As such, more founders are turning to RBF as a financing solution that better reflects how their businesses operate, scale, and manage cash flow.
While RBF is mature in Western markets, what primary misconceptions do regional founders still have about non-dilutive capital?
One of the biggest misconceptions is that non-dilutive capital is only for businesses that cannot raise equity. It is, instead, designed to complement equity rather than replace it entirely. The strongest businesses often use different funding sources for different objectives, depending on where they are in their growth journey.
Another common misconception is around pricing. Some founders assume non-dilutive financing is priced similarly to traditional bank loans, or that it should be cheaper than equity because it does not involve giving up ownership or board seats. In reality, non-dilutive financing has a different cost structure, with shorter repayment periods that typically range from 4 to 18 months.
As such, the cost-effectiveness of non-dilutive capital depends on how it is used. It can be particularly well suited to high-margin, quick-return activities where businesses can generate returns within the repayment period. For longer-term investments or baseline operating expenses, other forms of financing, such as equity, may be more appropriate.
Equity is better suited for long-term investments such as product development, market expansion, or building new capabilities. RBF, on the other hand, is often better suited for shorter-term growth initiatives and working capital needs, where businesses can generate returns more quickly.
With the rise of alternative financing options, it will be important for founders to better understand the different funding options available to them, so they can make more informed decisions based on their business needs rather than familiarity with traditional funding models.
With institutional partnerships like your credit facility with AlteriQ Global, how are investors viewing private credit across SEA today?
In today’s higher interest rate and more uncertain investment environment, we are seeing greater interest in private credit as investors look to diversify their portfolios with assets that offer more predictable return profiles and stronger downside protection. Our partnership with AlteriQ Global reflects this broader shift, as institutional investors increasingly recognise the role private credit can play alongside traditional fixed income and venture investments.
Compared with venture equity, where returns are typically realised only at an exit or IPO, private credit offers contractual cash flows over a defined tenor and yield. Investments are also backed by senior claims on receivables, providing greater visibility into risks and returns.
At Choco Up, our private credit facilities are backed by diversified pools of short-duration SME receivables linked to real economic activity, whether goods delivered or services rendered. This provides investors with exposure to a broad portfolio of operating businesses rather than relying on the performance of a single company.
We are also seeing interest in how technologies like tokenisation could improve transparency around these underlying assets. While still in their early stages, these innovations have the potential to support greater liquidity and broaden investor access over time.
How does your data engine safely underwrite applicants within 48 hours given Southeast Asia’s fragmented regulatory landscapes?
The key is that speed never comes at the expense of prudent risk management. Faster decisions are only possible because we have access to better, more relevant data.
Our AI-powered credit assessment engine analyses real-time business data, including sales performance, payment flows, and operational metrics, to build a more complete picture of a company’s financial health than traditional credit models. We also pair AI-augmented fraud detection and automated data processing to reduce time spent on repetitive checks, helping us deliver faster turnaround times. This enables us to assess businesses based on how they are performing today, rather than relying solely on historical financial statements or collateral.
While every market has its own regulatory and banking landscape, our underwriting framework is designed to adapt to local requirements by leveraging the data sources and business systems available in each market, while applying consistent credit and risk principles across our operations.
Ultimately, our goal is not simply to approve financing faster. It is to make better-informed lending decisions that responsibly expand access to capital for SMEs while maintaining strong risk standards.
Following an 85% jump in Singapore SME financing requests, what specific digital transformation or AI projects are portfolio companies funding?
Across our clients, we are definitely seeing a much stronger focus on technologies that deliver measurable business outcomes. Rather than pursuing digital transformation for its own sake, they are prioritising investments that improve productivity, strengthen cash flow, and support long-term growth.
AI investments are increasingly centred around customer service automation, marketing optimisation, sales enablement, and demand forecasting to help businesses operate more efficiently and make better-informed decisions.
At the same time, many SMEs continue to invest in technologies that strengthen day-to-day operations and financial management. Foundational digital infrastructure, such as ERP systems, accounting software, inventory management, and payment solutions, remains a key priority to improve operational visibility and streamline day-to-day processes. Automated invoice and supply chain workflows that help shorten payment cycles and improve cash flow visibility are other areas of focus, including accounts payable and receivable (AP/AR) automation, as well as AI-powered invoice processing (AI-OCR) and bank reconciliation.
We also see growing interest in AI capability building, with AI skills development increasingly viewed as a strategic investment rather than a discretionary expense. SMEs recognise that successful AI adoption depends not only on investing in technology, but also on equipping their workforce with the skills to use it effectively, driving stronger demand for AI training and upskilling. This was one of the factors behind our partnership with Hong Kong-based AI education provider Preface, which embeds financing directly into their programmes, making it easier for businesses to invest in these initiatives.
Looking ahead, as AI and digital capabilities become more accessible and affordable, we expect more SMEs to move beyond experimentation and integrate these technologies into their day-to-day operations. Those that adopt technology with a clear business objective, rather than simply following the latest trends, will gain the greatest competitive advantage.
What is Choco Up’s expansion playbook for managing cross-border complexity across markets with vastly different banking infrastructures?
One of the biggest lessons we have learned is that there is no one-size-fits-all approach: every market operates differently, so successful expansion requires balancing regional scale with local execution.
Our approach is to combine technology-driven financing capabilities with partnerships that strengthen our local capabilities. Rather than applying the same model everywhere, we tailor our products, data models, and risk frameworks to local market conditions while maintaining consistent underwriting principles.
Additionally, we stay closely connected to local business communities through brokerage events across our key markets, where we engage our brokers and cross-border payments partners like WorldFirst and Instarem to understand evolving business needs and market dynamics. These on-the-ground insights help to refine our current offerings, as well as develop new solutions that address the challenges faced by local businesses.
This enables us to grow sustainably alongside the businesses we support, ensuring our financing solutions remain relevant to local needs while helping SMEs expand across different markets.
Facing rising customer acquisition costs (CAC), how should D2C and e-commerce founders structure their capital stack during lean cycles?
Higher customer acquisition costs have made capital efficiency more important than ever for D2C and e-commerce founders.
The first principle is to always align financing decisions with the specific business objective they support, rather than relying on a single source of funding. A more resilient approach combines different forms of capital based on business needs, providing greater flexibility across different stages of growth.
Secondly, businesses should prioritise investments with clear and measurable returns. In today’s more challenging market conditions, disciplined capital allocation can become a key competitive advantage.
Lastly, founders should maintain strong visibility over their cash flow and plan ahead for upcoming funding needs. This ensures they have the right resources to capture growth opportunities without being constrained by short-term liquidity pressures.
Looking ahead 12 to 18 months, what major milestones or new financial products are on Choco Up’s regional roadmap?
We will continue to strengthen our product capabilities, particularly in areas like supply chain financing, to help businesses better manage their working capital needs as their operations and supply chains become more complex.
We will also be expanding our embedded financing capabilities by bringing access to capital closer to the platforms and tools merchants already use in their daily operations. Through this, we hope to reduce friction and make it easier for businesses to access the support they need at the right stage of their growth. Our recent expanded partnership with Koomi, which introduced embedded Accounts Payable (AP) financing within its restaurant operating platform, is an example of this strategy in action.
Beyond our product roadmap, we also have strategic initiatives in the pipeline to strengthen our regional platform for long-term growth, including an upcoming merger that will unlock new capabilities.
Our goal has always been to build solutions that grow alongside businesses, and over the next 12 to 18 months, we will remain focused on making financing more accessible and helping SMEs seize opportunities and scale with greater confidence.