Singapore-based Internet firm Garena raises $229m in fresh funding

A locally-based online entertainment and e-commerce start-up is attracting fresh funds from investors, despite falling valuations of some less successful start-ups in the United States.

Garena Interactive Holding, a fast-growing Internet company focused on South-east Asia, has raised US$170 million (S$228.8 million) in a fund-raising round led by Malaysia's state investment arm, Khazanah Nasional, The Wall Street Journal has reported.

The start-up is now valued at about US$3.75 billion, after raising more than US$500 million, including a round of fund-raising in March last year, that valued the firm at more than US$2.5 billion, the newspaper said, quoting unidentified sources.

Ontario Teachers' Pension Plan, one of Canada's biggest pension funds, and US-based private equity fund General Atlantic were its earliest investors, although they did not participate in the latest round of funding. The company did not disclose other investors in the new round.

The company said its revenue last year amounted to more than US$300 million. Garena does not disclose its net income, but says it uses profits from some operations to fund its newer initiatives, the newspaper reported.

The start-up is now valued at about US$3.75 billion, after raising more than US$500 million, including a round of fund-raising in March 2015 that valued the firm at more than US$2.5 billion.

The fund-raising comes at a time when investors are shying away from highly-valued start-ups in the US. Valuations are already shrinking for some start-ups with money-losing business models, including food delivery company DoorDash and software firm Couchbase, according to corporate documents. The lack of a single tech initial public offering so far this year shows that Silicon Valley's paper winners could fall further before investors can cash out through public listings.

But some investors are still eager to get a piece of the action, executives say.

"There are huge, genuine, solid opportunities in Asia and for businesses that are addressing real needs," said Mr Hugh Mason, a start-up veteran and technology investor at Singapore's Joyful Frog Digital Incubator.

Venture capital funding for technology start-ups across South-east Asia rose to US$308 million last year from US$10.8 million in 2011, according to AVCJ Research.

Garena was founded in 2009 by China native Forrest Li as an online gaming firm.

It claims it has grown to become South-east Asia's largest Web and mobile platform, with users spread across places like Hong Kong, Taiwan, Thailand and Vietnam. Its PC and mobile gaming services together attract some 28 million users monthly.

Garena has since added services such as a messaging app and a payment system that allows users who lack bank accounts to pay utility bills or buy games. The company generates revenue in part through in-game purchases users make.

A version of this article appeared in the print edition of The Straits Times on April 01, 2016, with the headline 'S'pore-based Internet firm Garena raises $229m in fresh funding'. Print Edition | Subscribe