Biggest Investments by SoftBank Include a 37% Share of Kalanad Technology at Just Under 70

The keenness to plug gaps and support companies during the growth stage funding is seen as well-intentioned, but it is countered by the view that opportunism is a motivating factor. Two partners at global VC firms who spoke to us speculated that a major reason why regional VC firms are raising larger funds is to play the “management fee game”. VCs usually charge a management fee from the fund, ranging from 2% to 2.5%, to cover salaries and other overhead costs.



“Fund managers are going to get paid at the end of the day, whether they deliver poor or good returns for LPs. Moving up to raise more funds to ‘bridge that funding gap’ means more management fees for the VCs, so why not?” explained one of the VCs, who did not wish to be named for fear of upsetting others in the industry.

But moving up the pipe isn’t for everyone. Wavemaker Partners, for one, is content to stay on its path and continue to make seed investments. “It’s just knowing who we are,” explained Santos from the firm. “I see the seed stage as a creative process—it’s very early, you have a theme, an opportunity, the initial thesis on how to take advantage of that opportunity and hopefully, some traction and a plan.”

If you asked me when I started seven years ago, ‘Are you ready to manage a $100M fund?’ At that time I might have said I’d love to, but I’m not sure I’m quite ready. Now I feel we are. If you ask me now if I’m ready to manage a $500M fund now, probably not. Talk to me in seven years [and] maybe something’s changed.


Sticking to seed also keeps a firm relatively shielded from the increasing competition that’s happening at later stage deals. Global VCs like GGV Capital and Qiming Venture Partners that have a major focus in China—each of which manages over $4 billion of assets—are beginning to back startups in Southeast Asia, while the likes of Accel and Lightspeed tipped to enter from India.

The continuous evolution
There is also a legitimate concern that seed stage investing may become underserved as Southeast Asian funds move to larger cheques. In fact, Cuaca and Anand both believe that there are more companies than capital in Southeast Asia.

Over the last decade, the region’s online population has grown to 360 million mobile internet users with digital services including ride-hailing, e-commerce and video streaming established as mainstream industries. This influx of venture capital has expedited the development of Southeast Asia’s startups.

However, Anand foresees that these funds will look to cover the gamut of deals—from seed to Series B and beyond. That’s echoed by Hian Goh, a founding partner of Openspace Ventures, which counts Gojek among its portfolio.

“I think the cycle in Southeast Asia is good for [at least] another three years because you will have investors who have just raised money putting that capital to work,” Goh said in an interview.

Investors are eager to bet on this. Southeast Asia has not seen major startup exits, but there is a potential market for it in the future —an estimated 700 in the region between 2023 and 2025. This is seemingly driving the VCs to invest in promising startups earlier and earlier.