Credit Guarantee Scheme and Startup Businesses: Financial Pipelines and Successful Startups in South East Asia

Disruption to the traditional businesses have highlighted the importance of startups to the economic well-being of a country. Numerous studies have shown that startups contribute positively to various economic indicators including job creation, economic growth, and improved productivity. Despite the obvious benefits successful startups can bring to the economy, they are not able to obtain sufficient funding persistently which is crucial for startups to grow. This persistent funding gap is often attributed to lack of collateral and asymmetric information on the viability of the products and startups. As a result, many startups could have stagnated as small and medium enterprises (SMEs). This is especially true in South East Asia. Credit guarantee schemes (CGS) could potentially reduce this funding gap to help startups grow. This chapter seeks to review the experiences of four very diverse CGS for comparative studies. These four CGS had contributed to the dynamic growth of the economies which were badly decimated in the Second World War. This chapter also takes stock of the existing CGS in various Southeast Asian countries and seeks to draw valuable lessons for policy implementation from the four CGS.