Jungle Ventures’ Anand told us that the matching ratio from the Singaporean government helped de-risk their LPs’ capital, assuring those investing in the region for the first time. Jungle counts World Bank affiliate International Finance Corporation (IFC) and Cisco Investments among its LPs.
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A number of that ESVF cohort exited when the scheme turned its focus to deep tech, and the matching ratio was reduced to a one-to-one basis. But with the early funds showing results, the pitch to those who funded the VCs became easier. The likes of Jungle and Golden Gate moved to raise funds independent of government involvement.
The scheme put the region on the venture capital map. “Maybe a few years ago, I needed to explain [to LPs] why they needed to care about Southeast Asia, and then explain why we are worth working with,” said Santos. “Now, I don’t need to sell Southeast Asia as much. Some have already decided to invest in here. They are just choosing who they want to work with.”
“The conversations [now] tend to be more about ‘Why are you more successful than the others?’ And ‘What’s your differentiator?’” added Anand.
Even the more recent challenges like the ongoing US-China trade war has not discouraged investors from the region. If anything, it looks like Southeast Asia may be benefitting from the uncertainty. The likes of Apple, Google and Foxconn—the world’s premier electronics manufacturer—are either diversifying their supply chain or shifting it entirely into the region. This is thanks to factors like the region’s young population, high internet penetration and rising income levels—all of which is seen as a key ingredient for online services to grow.
New growth, newer capital
Such increased interest from LPs is seeing newer funds take root in the region, too.
Singapore-based Insignia Ventures Partners has gobbled up capital at an unprecedented rate, raising raised $120 million for its maiden fund in 2018. It was founded by Yinglan Tan, a former venture partner with US investment giant Sequoia Capital in Singapore. Last month, it announced a final close of its second fund at $200 million.
Victor Chua’s Vynn Capital is another example. The former vice president of investments at China-headquartered Gobi Partners is in the process of raising a $40 million maiden fund for the new firm.
The abundance of such VC firms—that too with deep coffers—recast the die, especially as the ecosystem has matured. When the earliest tech VC firms sprouted in 2012, they were merely helping young companies get off the ground. Today, investors in Southeast Asia are keen to support companies beyond their early days and into growth times. As startups scale beyond early funding rounds, they often find themselves, according to Lauria, “needing to syndicate rounds from multiple Series A investors or appeal to alternative, often unconventional sources of later-stage capital, such as family offices and global private equity investors.”