KUALA LUMPUR (Aug 15): Investment and advisory firm Blackstone Group expects to invest at least US$2 billion (RM8.91 billion) in technology debt deals over the next few years — its first major push into lending to start-ups and technology companies.

In a report last Friday (Aug 12), Crunchbase — which tracks trends, investments and news of global companies from start-ups to the Fortune 1000 — said the news is another sign of a cooling venture capital market, where cash is becoming increasingly harder to raise at the inflated valuations of last year.

It said companies looking to extend runway, while not succumbing to the dreaded down round, are likely to turn to debt as a viable alternative to keep companies afloat among some economic uncertainty.

Earlier this month, Crunchbase reported that venture capital-backed start-ups in the US raised nearly US$15.9 billion in debt in 321 deals through the first seven months of the year.

Crunchbase said that in just July, start-ups in the US raised more than US$1.4 billion in publicly announced debt — far outpacing the US$824 million in July last year.

The firm said it is important to note that those numbers are not all-encompassing — as many companies do not announce debt raises — and it is not unusual for some start-ups in areas like fintech to raise debt for working capital.

Nevertheless, it said the use of debt by tech companies seems to be on the rise.

Crunchbase said Blackstone will now enter a market where it will compete with other big players like Hercules Capital and Silver Lake in lending capital.

It said that in recent years, Blackstone had become more aggressive in the tech start-up ecosystem.