Techblog
11 venture capital firms entrepreneurs should know about
With funding being a significant challenge in Southeast Asia’s fast-growing start-up scene, venture capitalists can be the difference between a sinking business and the next big thing.
There are many sources for start-ups to obtain funding from. Besides bank financing, government grants and seed or crowdfunding, firms that want to grow their offerings in a big way will often look to venture capitalists.
With 2014 seeing some very huge VC-led deals (think Grabtaxi’s US$15 million injection primarily from GGV Capital, Luxola’s US$10 million funding round from Transcosmos and Tokopedia’s US$100 million contribution from Softbank and Sequoia), here’s a look at what VC firms are all about and the players in the space that every entrepreneur should know.
What is a venture capital firm and what do these do?
A venture capital (VC) firm creates funds by gathering money from institutions and wealthy individuals who are looking to invest. VCs typically consist of limited partners and the partners running the firm are known as general partners.
General partners tend to have experience in the VC or finance space and/or as entrepreneurs. They scour the market for business ideas with potential, looking for companies that are trying to set up and/or grow. A VC firm then invests in these start-ups and recovers its money when these businesses go public or are acquired.
Why do start-ups need VC firms?
Unless a new business founder is moneyed and willing to risk their personal wealth, they will often face problems finding funding sources. Banks tend to shy away from high-risk unproven propositions with no collateral and bootstrapping and often their personal networks can only go so far.
This is where VCs can help in a big way. Their very purpose is to invest in small businesses that are likely to grow rapidly in a short amount of time or could potentially give them a high return on investment. Typically, there are different rounds of funding connected to a business’s growth cycle and VC firms may choose to invest at certain growth stages.
The initial round, known as the seed round takes place before the business is launched. Once the launch parameters are in place and the business is in start-up mode, it seeks Series A funding. After a successful launch, VCs step in again for the Series B round to fund further growth. The next round, Series C happens only after the business has broken even and proven its creditworthiness.
These rounds may or may not be followed by a few more till a final round known as the mezzanine or bridge round that helps the firm go public. The rounds can also be referred to as early stage, formative stage and so on. The business is re-evaluated at each stage so that there is no ambiguity regarding the investors’ stakes.
1. Infocomm Investments
With more than US$200 million worth of funds, Infocomm Investments (IIPL) is the VC subsidiary of Singapore’s Infocomm Development Authority (iDA). IIPL invests in local and international Singapore-based growth-stage ICT start-ups, the most noteworthy being a SG$50 million injection into online luxury goods company Reebonz, which is now steadily expanding across Asia-Pacific after beginning in Singapore.
2. Jungle Ventures
Set up in 2012, this Singapore-based firm focuses on building tech category leaders across Asia. Jungle Ventures led a recent US$7.5 million Series B funding for Singapore-based animation studio One Animation and was also involved in a US$2 million funding round for Malaysian online finance comparison platform iMoney.
3. Monk’s Hill Ventures
Monk’s Hill Ventures is based in Singapore and Jakarta, and invests in early-stage companies in Asia and leading international growth-stage technology businesses looking to enter Asia. Monk’s Hill Ventures led the highest ever financing for a tech start-up in the Philippines, with a US$2.5 million Series A funding round in real estate portal ZipMatch. It also led a US$2.5million Series A round for Singapore based e-commerce logistics firm Ninja Logistics.
4. Golden Gate Ventures
Golden Gate Ventures is an early-stage venture capital firm from Singapore that invests in tech start-ups across Southeast Asia. It recently announced a US$35 million first close on a US$50 million fund, its second in the region. In May 2014, Golden Gate Ventures participated in a US$560,000 round of seed funding for property search website 99.co.
5. Fenox Venture Capital
This Silicon Valley-based venture capital firm invests in emerging technology companies worldwide. Indonesia’s first Muslim fashion portal, Hijup.com, recently received an undisclosed amount in two rounds of seed funding, both of which involved Fenox. In August 2014, Fenox also contributed an undisclosed amount of money to wedding services website Bridestory, which has since gone global.
6. SB ISAT
In May 2014, Indonesian telco Indosat partnered with Japanese telco SoftBank to launch SB ISAT, a US$50 million VC fund targeting growth-stage start-ups in Indonesia. It led a recent US$4 million round of funding for online start-up portal Tech in Asia and also invested an undisclosed amount in Indonesian mobile app Dealoka.
7. GREE Ventures
Last year, Japan-based GREE Ventures announced its second fund of US$50 million for tech start-ups in Southeast Asia and Japan. This May, online-to-offline Indonesian e-commerce start-up Kudo received a seven-digit investment from the firm. GREE also participated in a US$1 million seed funding round for Healint, a Singapore-based start-up with a mobile app that helps predict migraines.
8. CyberAgent Ventures
Japan based Cyberagent Ventures recently announced the setting up of a new US$50 million fund for Southeast Asia, with a focus on investments in Indonesia. In June 2015, CyberAgent Ventures led a Series A round of funding for Vietnamese bus-ticketing platform VeXeRe, which is now the leading bus ticketing portal in Vietnam. It also helped fund Coda Payments, a Singapore-based e-payment company, in a US$2.3 million Series A deal in 2013.
9. Rebright Partners
Rebright Partners launched a fund for tech start-ups in Southeast Asia in 2013. It helped in a seed funding round for Indonesian online shop aggregator Kleora this past May. It also participated in seed funding Indonesian B2B online marketplace IndoTrading in 2013.
10. Sequoia Capital
Most famously, Sequoia Capital helped raise US$100 million for Indonesia’s leading e-commerce marketplace, Tokopedia, in late 2014. In early 2015, Sequoia co-invested in a second round of funding for Singapore-based property portal 99.co.
11. Singtel Innov8
Singapore’s leading telco set up Singtel Innov8 in 2010 with an initial fund size of S$200 million. The firm invests in innovative technologies and solutions to create future growth engines for the group. In April 2014, Innov8 participated in a US$3.2 million Series B round for Singapore cyber surveillance start-up KAI Square. Flocations, an online travel firm which received USD 0.57M in a seed round from Innov8 and other investors, has since been acquired by Japanese travel operator Venture Republic Group.