S’pore venture capital surges as startups seek room to grow

SINGAPORE: Singapore is experiencing a surge in venture capital (VC) fundraising, reflecting growing interest in Southeast Asia’s startups.

This month, Vertex Ventures and two other venture-capital firms completed fundraising efforts in the city, each with their largest fund yet. Last month, East Ventures, which made early bets on successful startups like Tokopedia and Traveloka, raised US$30 million (RM127.25 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 startup ecosystem,’’ said Paul Meyers, head of muru-D Singapore, Telstra Corp’s accelerator programme. “As a result, we’re seeing more — and higher quality — startups 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 report.

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 Ltd’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 testify to how the Singaporean startup scene still produces companies capable of attracting significant capital,’’ said the report.

Sea, a gaming company formerly known as Garena, went public in the US recently, 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 earlystage investing as startups grow in size. For example, B Capital Group, a VC firm that includes Facebook Inc co-founder Eduardo Saverin, typically targets series B and C financing rounds of tech startups in the US, Southeast Asia and India.

For its third fund for Southeast Asian and Indian deals, Vertex Ventures, which raised US$210 million this month, invited outside investors for the first time.

Its corporate backers included Thailand’s Kasikornbank Pcl and Taiwan’s Cathay Life Insurance Co. Vertex has had two funds focused on Southeast Asia in the past, fully funded by parent Temasek Holdings Pte Ltd, Singapore’s state investment firm.

“There is a huge market potential in Southeast Asia,” said JP 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.”