Boom time for venture capital firms in Singapore

VCs in Singapore are luring funds from a wide range of investors, including family offices as well as multinationals and conglomerates seeking to diversify their traditional businesses.
VCs in Singapore are luring funds from a wide range of investors, including family offices as well as multinationals and conglomerates seeking to diversify their traditional businesses.PHOTO: ST FILE

Investors are pouring money into VC funds to gain access to S-E Asia's promising start-ups

Singapore is experiencing a surge in venture capital (VC) fund raising, reflecting growing interest in South-east Asia's start-ups.

This month, Vertex Ventures and two other VC firms completed fund-raising efforts here, each with their largest fund yet.

Last month, East Ventures, which made early bets on successful start-ups like Tokopedia and Traveloka, raised US$30 million (S$41 million) that will go towards seed capital and early-stage financing.

Investors are putting money into the region's venture firms as they seek opportunities beyond the United States and China, the primary focus for Asia deals in recent years.

Singapore's Government is providing incentives to attract entrepreneurs and venture capitalists - cutting regulatory red tape, protecting intellectual property and allocating public money for early investments.

"In the past decade, Singapore has invested heavily in the start-up ecosystem," said Mr Paul Meyers, head of muru-D Singapore, Telstra Corp's accelerator programme. "As a result, we're seeing more, and higher quality, start-ups appearing and getting funded."

The venture industry continues to be led by the US, which accounted for US$21.5 billion of the US$39 billion total invested in the third quarter, according to KPMG's Venture Pulse Q3 2017 report.

  • US$39b

    Total venture capital investments globally in the third quarter, according to KPMG's Venture Pulse Q3 2017 report.


    US$21.5b

    Venture investments in the United States, which continues to lead VC investments.


    US$12.3b

    Venture investments in Asia - the second-largest region.

Asia is the second-largest region at US$12.3 billion, with China pulling in US$10.2 billion of that total.

Singapore venture investments totalled US$725.3 million in the second quarter of this year, boosted by Sea's US$550 million funding round, according to KPMG. In the following three months, investments totalled US$140.3 million.

"The fact that significant upticks still occur testifies to how the Singaporean start-up scene still produces companies capable of attracting significant capital," the report said.

Sea, a gaming company formerly known as Garena, went public in the US last week, raising US$884 million in its initial public offering. The Singapore-based company increased its share price and the number of shares available, signalling strong demand.

Some Singapore-based VCs are moving beyond seed and early-stage investing as start-ups grow in size. 

For example, B Capital Group, a VC firm that includes Facebook co-founder Eduardo Saverin, typically targets series B and C financing rounds of tech start-ups in the US, South-east Asia and India.

Vickers Venture Partners, which completed its fund raising at US$230 million recently, is "stage agnostic", according to chairman Finian Tan.

VCs in Singapore are luring funds from a wide range of investors, including family offices as well as multinationals and conglomerates seeking to diversify their traditional businesses and get access to promising tech start-ups through their corporate VC arms.

Jungle Ventures' SeedPlus, which targets early-stage deals in Asia, closed its first fund at $25 million in April with backing from the investment arms of Fidelity International and Cisco Systems.

For its third fund for South-east Asian and Indian deals, Vertex Ventures, which raised US$210 million this month, invited outside investors for the first time. Its corporate backers include Thailand's Kasikornbank and Taiwan's Cathay Life Insurance. Vertex has had two funds focused on South-east Asia in the past, fully funded by parent Temasek Holdings.

"There is a huge market potential in South-east Asia," said Mr J.P. Lee, partner and managing director of SoftBank Ventures Korea, which has backed Indonesia's Tokopedia.

"There is economic growth, government support and appreciation for talent. We plan to do more work there."

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A version of this article appeared in the print edition of The Straits Times on October 24, 2017, with the headline 'Boom time for venture capital firms in S'pore'. Print Edition | Subscribe